Worse-than-expected Australian gross domestic product figures for the third-quarter caused the Australian Dollar to sink yesterday. Growth slowed from an upwardly-revised 0.9% to 0.6% on the quarter, against consensus expectations of 0.7%. Year-on-year GDP climbed from an upwardly-revised 1.9% to 2.8%, missing the forecast 3%.
October’s trade balance data, released this morning, could weaken the Australian Dollar further, as it is expected to show a –A$345 million decrease in the trade surplus.
Despite weakness in the Pound across the board elsewhere, the AUD/GBP exchange rate slid lower yesterday. The Irish border issue was continuing to hamper Brexit negotiations, with the DUP still refusing to allow a deal that meant Northern Ireland remained aligned with EU regulations. Markets were also alarmed to hear Brexit Secretary David Davis admit there were no sectoral analyses of the impact of a divorce upon the UK economy.
There is little of interest on the UK economic calendar today, but this doesn’t mean the Pound will remain steady; Brexit is sure to keep things volatile.
The Euro was on poor form yesterday thanks to some disappointing domestic data and positive US ecostats. German factory orders growth slowed marginally more-than expected year-on-year and Italy’s retail PMI slipped back into contraction territory. European Central Bank (ECB) member Yves Mersch gave some cause for positivity, yet markets largely ignored it. The policymaker claimed that the ECB needed to plan for the end of quantitative easing and that the risks of extending it further would get greater the longer the programme ran on.
German industrial production figures for October are set for release this evening and are predicted to show a respectable uptick in output.
A solid reading from the latest ADP employment report boosted the US Dollar yesterday. The ‘Greenback’ was able to make bullish gains after the ADP figure came in right on forecasts at 190,000. Although this is a slowdown on the previous month, it remains firmly within the average range for the past six years.
Initial and jobless claims figures will be released today; a positive figure will keep the USD buoyant but a negative might not have much of an impact, given the general positive outlook for the US Dollar at the moment.
The latest Bank of Canada (BOC) interest rate decision saw policymakers opt to keep rates frozen at 1.00% as expected. The Canadian Dollar dropped early this morning after the release of the BOC statement, which showed that the Bank was very cautious about the possibility of future rate hikes. The incredibly wary tone of the communiqué suggests there won’t be any changes in monetary policy for some time.
If markets have forgotten about the BOC rate decision by this evening, October’s building permits figure could cause some fluctuation for CAD.
The New Zealand Dollar shot higher yesterday, thanks to the weakness in the Australian Dollar. With both the ‘Aussie’ and the ‘Loonie’ dropping, the ‘Kiwi’ was the obvious choice for investors looking for a high-yield asset.
December 7th 10.30 AUD Trade Balance (OCT) A$1.4b
December 7th 17.00 EUR German Industrial Production n.s.a. and w.d.a. (YoY) (OCT) 4.3%
December 7th 23.30 CAD Building Permits (MoM) (OCT)
December 7th 23.30 USD Initial Jobless Claims (DEC 02) 240,000
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