Australian Dollar (AUD) Supported by Inflation Data
The Australian Dollar (AUD) struck higher yesterday on the latest CPI release. While headline inflation slowed, the trimmed mean CPI rose from 1.6% to 2.1% the highest level since Q4 2015.
The unwinding of free childcare in 2020 continued to have an effect, alongside the cost of housing and household equipment.
Looking ahead, yesterday’s CPI print sparked speculation that the Reserve Bank of Australia (RBA) might tighten monetary policy earlier than expected. Subsequently, investors will pay particular attention to Guy Debelle’s speech today.
Pound (GBP) Sentiment Weak amidst Budget Announcements
The Pound (GBP) edged down against several peers on Wednesday as Chancellor of the Exchequer Rishi Sunak laid out the autumn budget.
Sunak said he had made four judgements: that fiscal rules would be met ‘with a margin to protect ourselves against economic risks’; that working families would be supported; that aid spending would ultimately be restored to 0.7% of national income and that departmental spending would increase by £150bn.
A lack of data in today’s session leaves the Pound exposed to losses: GBP is likely to trade on market mood alongside any external developments.
Euro (EUR) Strengthened by Strong German Data
The Euro (EUR) trended up yesterday as an unexpected rise in German consumer confidence beat market forecasts.
While propensity to buy rose, however, both economic and income expectations fell. Many companies continue to suffer from lack of supplier parts, as employees fear a loss of income due to shorter contracts.
Looking ahead, its set to be a busy session for EUR investors, with German employment data, alongside an interest rate decision from the European Central Bank (ECB) and German inflation all set to influence the Euro.
US Dollar (USD) Firms as Durable Goods Orders Decline by Less than Expected
While new orders for US durable goods declined on Wednesday for the first time in five months, the US Dollar (USD) firmed against its peers as orders for non-defence capital goods excluding aircraft – a proxy for business spending plans – rose 0.8%.
Signs of economic uncertainty are not necessarily detrimental to the US Dollar, as the safe-haven currency attracts investment in times of volatility.
US GDP figures later today are likely to influence USD trading going forwards: GDP is expected to fall to 2.7% for the third quarter.
Canadian Dollar (CAD) Rises on BoC Commentary
The Canadian Dollar (CAD) found support yesterday as the Bank of Canada (BoC) decided to end its quantitative easing programme, instead moving into a reinvestment phase.
The central bank kept its target for the overnight rate at 0.25%, confirming that it expects borrowing costs to remain stable until mid-2022.
New Zealand Dollar (NZD) Trades Mixed on Weak Business Confidence
New Zealand’s final business confidence reading reported a fall to -13.4 on Wednesday, revised down from an anticipated -8.6. The data weighed upon the New Zealand Dollar (NZD) in the first half of the session, although the ‘Kiwi’ managed to recoup some losses later in the session.
Data Releases
Oct 28th 09:40 AUD RBA Debelle Speech N/A
Oct 28th 17:55 EUR German Unemployment Rate (Oct) 5.4%
Oct 28th 19:00 EUR Eurozone Consumer Confidence Final (Oct) -4.8
Oct 28th 19:00 EUR Eurozone Economic Sentiment (Oct) 117.1
Oct 28th 21:45 EUR ECB Interest Rate Decision 0%
Oct 28th 22:00 EUR German Inflation Rate Prelim (Oct) 4.4%
Oct 28th 22:30 USD GDP Growth Rate (Q3) 2.7%
Oct 28th 22:30 USD Initial Jobless Claims (23/Oct) 290K