Australian Dollar (AUD) Weakens as Unemployment Surges
The Australian Dollar (AUD) faced a broad selloff yesterday, as the domestic jobless rate climbed from 4.6% to 5.2% in October, much worse than an expected rise to 4.8%.
The blow was somewhat softened by a sharp rise in the participation rate, indicating the rise in unemployment is most down to more people looking for work than previously.
A lack of significant Australian data today means the ‘Aussie’ is likely to trade on external factors such as risk appetite and commodity dynamics.
Pound (GBP) Edges Up on Brexit Optimism
Despite a largely disappointing Q3 GDP release on Thursday’s session, the Pound (GBP) managed to find some support as the EU expressed willingness to review its stance on Northern Ireland border checks.
According to one source, ‘the percentage of [border] controls removed could yet increase, through negotiation’- although European Commission vice-president Maroš Šefčovič warns that a deal won’t be possible unless the UK drops its ‘unattainable’ demands.
Tomorrow, a speech from the Bank of England (BoE)’s Jonathan Haskel may provide some trading stimulus.
Euro (EUR) Wavers on Interest Rate Uncertainty
The Euro (EUR) traded in a mixed range yesterday as investors digested Wednesday’s high German inflation, together with remarks from the European Central Bank (ECB).
In an economic bulletin, the ECB admitted that inflation was lasting longer than expected, but maintained that most price pressures were temporary. Regardless, markets are now pricing in a 10bps rate hike by September 2022.
Industrial production figures may influence Euro trading today, potentially exerting pressure if output contracted again in September.
US Dollar (USD) Maintains Gains from US CPI
The US Dollar (USD) extended its rally on Thursday despite a US public holiday. The ‘Greenback’s advance was supported by Wednesday’s high inflation data.
US inflation rose to a 30-year high in the year to October, prompting market participants to pencil in three interest rate hikes during the course of 2022. The Federal Reserve confirmed that tapering will start in mid-November, putting asset purchases on a path to conclude in mid-June 2022.
Tomorrow’s job openings and preliminary consumer sentiment reading will likely direct further movement for the ‘Greenback’.
Canadian Dollar (CAD) Slides on Fears of US Crude Supply
The Canadian Dollar (CAD) tumbled yesterday as oil prices continued to slump following Wednesday’s US inflation data.
WTI crude fell more than $3.00 per barrel after the CPI release and has yet to make back its losses: CAD investors fear the Biden administration might release oil reserves to lower prices.
New Zealand Dollar (NZD) Corrects from October Rally
The New Zealand Dollar (NZD) weakened on Thursday as the currency corrected from October’s highs. Optimism over the Reserve Bank of New Zealand (RBNZ)’s hawkish monetary policy was undermined as other central banks accelerate their own tightening measures.
Data Releases
Nov 12th 20:00 EUR Eurozone Industrial Production (Sep) -0.5%
Nov 13th 00:00 GBP BoE Haskel Speech N/A
Nov 13th 01:00 USD Michigan Consumer Sentiment Prelim (Nov) 72.4
Nov 13th 01:00 USD JOLTS Job Openings (Sep) 10.3m
Nov 13th 03:10 USD Fed Williams Speech N/A