Positive domestic and overseas data boosted the Australian Dollar across the board yesterday. The December AiG performance of manufacturing index surprised forecasts of a slowdown from 54.2 to 52.2 after climbing to 55.4. The CoreLogic house price index, also for December, rose 1.4%. Meanwhile, the Caixin manufacturing PMI for China revealed that sector growth had accelerated at the end of last year after the index rose from 50.9 to 51.9, against predictions of no change.
There is no Australian data set for release today, but the Australian Dollar could find itself reacting to the release of the latest Chinese Westpac consumer sentiment index.
Manufacturing data may have surprised to the upside, but this didn’t stop the AUD/GBP exchange rate from registering bullish gains. The Markit index rose to a two-and-a-half-year high of 56.1 in December, with growth in new orders and output among the fastest pace seen during the twenty five years the survey has been running. However, investors were unsettled by the shock resignation of one of the UK’s top EU ambassadors. Sir Ivan Rogers resigned his post a year early, with just a few months to go until exit negotiations are set to begin.
After the strong performance from yesterday’s manufacturing PMI, investors will be hoping to see a similar improvement from UK construction PMI today, although a -0.2 point weakening has been forecast.
Nothing could cheer the Euro up yesterday, despite impressive domestic data. The outlook for the Eurozone just seemed too bleak for investors to consider buying the common currency, with threats such as widening policy divergence and rising anti-Euro sentiment clouding the future of the currency bloc. The Euro slump came despite a drop in German unemployment of -17,000 – more than three-fold the decline forecast – and a sharp rise in the pace of German inflationary growth. The month-on-month consumer price index clocked in ten basis points above forecasts at 0.7%, while year-on-year CPI printed at 1.7% instead of 1.4%.
If today’s Eurozone consumer price index figures for December were to show the forecast – or above forecast – rise predicted, the Euro could find itself trending bullishly.
Although the high-risk Australian Dollar proved more popular, the US Dollar was able to make advances against the majority of its other peers. A positive outlook for US inflation, thanks to the potential for incoming President Donald Trump to implement strong spending and investment plans, kept sentiment towards the ‘Greenback’ hot. The latest ISM manufacturing index also impressed, climbing from 53.2 to 54.7 instead of registering the minor rise to 53.5 forecast.
MBA mortgage applications data is the only US ecostat on the calendar today.
The Australian Dollar was the more popular of the commodity assets, keeping AUD/CAD on the decline, but elsewhere the Canadian Dollar was making strong advances. The RBC Canadian manufacturing index for December climbed 0.3 points to 51.8, while crude oil prices were surging. Both WTI and Brent were advancing over 2.2%, with the latter rising above US$58 per barrel, buoying demand for the ‘Loonie’.
The only Canadian data set for release today is the MLI leading indicator for November, which is unlikely to have a significant impact upon the ‘Loonie’.
Falling dairy prices saw the New Zealand Dollar slump yesterday, with the Global Dairy Trade price index weakening -3.9%. Considering the last five auctions have shown weakening price growth – and now the past two declining prices – investors are beginning to worry that a definite trajectory has emerged for New Zealand’s most lucrative commodity, weakening the outlook of the domestic economy.
There is no New Zealand data on the economic calendar today.
January 4th 12.45 CNY Westpac-MNI Consumer Sentiment (DEC)
January 4th 20.30 GBP Markit/CIPS UK Construction PMI (DEC) 52.6
January 4th 21.00 EUR Eurozone Consumer Price Index Estimate (YoY) (DEC) 1.0%
January 4th 21.00 EUR Eurozone Consumer Price Index – Core (YoY) (DEC A) 0.8%
January 4th 23.00 CAD MLI Leading Indicator (MoM) (NOV)
January 4th 23.00 USD MBA Mortgage Applications (DEC 30)
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