Higher Unemployment Rate Fuels Australian Dollar Sell-off
While forecasts had pointed towards an uptick in the Australian unemployment rate AUD exchange rates still slumped in the wake of the labour market data. A surprise decline in both October’s participation rate and employment change figures helped to boost the unemployment rate from 5.2% to 5.3%. With the labour market failing to tighten anxiety over the health of the wider Australian economic outlook picked up once again, leaving the Australian Dollar on the back foot.
As long as trade tensions between the US and China fail to show signs of easing AUD exchange rates are likely to remain under pressure today.
Disappointing UK Retail Sales Drag on Pound
Confidence in the underlying health of the UK economy took a fresh blow as October’s retail sales data fell short of forecast. Investors were disappointed to find that sales excluding auto fuel had dropped -0.3% on the month, failing to show steady growth as anticipated. With consumers appearing to take a more cautious outlook support for the Pound naturally faltered, given that lower levels of spending are likely to drag on growth in the fourth quarter.
In the absence of any fresh UK data, though, GBP exchange rates still look vulnerable to political anxiety.
Surprise German Growth Lifts Euro
Germany narrowly avoided falling into a state of technical recession last night, delivering growth of 0.1% in the third quarter. This modest uptick raised hopes that the Eurozone’s powerhouse economy could recover its lost momentum in the coming year, easing the downside pressure on EUR exchange rates. Even so, the Euro struggled to make any particular gains against its rivals thanks to the downward revision to the second quarter growth rate and underlying signs of weakness in the growth report.
A widening of the Eurozone trade surplus could encourage the Euro to push higher across the board this evening, however.
US Dollar Shrugs off Jobless Claims Rise
Although the latest US initial jobless claims figure showed a modest uptick on the week this only put limited pressure on USD exchange rates. Safe-haven demand helped to support the US Dollar overnight thanks to the ongoing lack of progress towards a US-China trade agreement. As the two sides still look distinctly at odds over the issue of tariffs market risk appetite remained muted, helping to ease the negative pressure on the US Dollar.
If advance retail sales fail to pick up as anticipated this could see USD exchange rates trending lower across the board tonight.
Improved House Prices Limit Canadian Dollar Downside
A better-than-expected new housing price index put a floor under CAD exchange rates overnight, muting the impact of deteriorating market confidence. As prices rose 0.2% on the month this suggested that the Canadian housing market is in a stronger state of health than previously thought, boding well for the wider economic outlook in the third quarter.
However, the mood towards the Canadian Dollar could easily sour if comments from Bank of Canada (BOC) Governor Stephen Poloz prove dovish in nature.
Fading Impact of RBNZ Rate Hold Leaves New Zealand Dollar Under Pressure
The New Zealand Dollar failed to hold onto its bullish trend for long as the surprise of the Reserve Bank of New Zealand’s (RBNZ) lack of interest rate cut faded. With confidence in the outlook of the domestic economy still generally limited and with market risk appetite diminished NZD exchange rates came under renewed pressure yesterday.
With forecasts pointing towards another monthly contraction from October’s manufacturing PMI support for the New Zealand Dollar looks set to weaken further this morning.
Data Releases
November 15th 07:30 NZD Manufacturing PMI (OCT) 48.4
November 15th 12:15 CAD Bank of Canada Governor Poloz Speaks
November 15th 20:00 EUR Eurozone Trade Balance (SEP) 17.5 billion
November 15th 23:30 USD Advance Retail Sales (MoM) (OCT) 0.2%