As was the case on Tuesday, yesterday saw a combination of domestic and overseas developments lifting the Australian Dollar against many of its peers. There was a lack of Australian data, but the Westpac-MNI consumer sentiment figure for December climbed from 114.9 to 116.6. Meanwhile, last year’s better-than-anticipated recovery in commodity prices has seen experts predicting Australia’s biggest mining companies will see a sharp spike in revenues, profits and dividends over the coming month.
The AiG performance of service index for December is due shortly.
AUD/GBP exchange rates held minor gains yesterday, although the Pound was making tentative advances against many of its major peers. On the one hand, investors were cheered by the better-than-forecast performance of the construction PMI for December. However, spirits were dampened by a profit warning from Next; the UK’s largest retailer. Simon Wolfson, Next CEO and prominent Brexit campaigner, called for clarity from the government on its Brexit strategy; particularly disconcerting to investors considering the call came from inside the Leave camp.
The vital UK services PMI is set for release tonight. While forecasts are for the index to edge lower, December’s other PMIs have both shown a surprisingly strong increase, lifting hopes the UK’s key economic sector will also have outperformed expectations.
Strong Eurozone inflation data once again failed to impress investors yesterday, with the Euro recording minor losses versus a number of the major currencies. Eurozone consumer prices rose 1.1% on the year in December, compared to a forecast acceleration from 0.6% to 1%. Core prices grew 0.9% against predictions of a stagnation at 0.8%. However, with the long-term inflation outlook remaining weak, investors were more inclined to wait and see if the uptrend continued before going long on the Euro, leaving the common currency in low demand yesterday.
There are several PMIs due today for France and Germany, as well as the retail index for the Eurozone as a whole.
Profit-taking weakened the US Dollar yesterday, as traders sold the ‘Greenback’ from a 14-year high against a basket of currencies. The approach of the minutes from the December Federal Reserve monetary policy meeting also saw investors holding off on buying the US Dollar. Several rate hikes are expected this year, but the minutes would give a better indication of the mood of the Federal Open Market Committee (FOMC).
While there is no impactful US data on the calendar today, early tomorrow morning will see the publication of the latest ISM non-manufacturing composite index.
After a slump yesterday in the oil markets towards the end of trading, crude was holding steady around its best levels in a year-and-a-half, keeping appetite for the ‘Loonie’ firm. Investors remained positive, despite the EU Committee on Employment and Social Affairs releasing a report saying the Comprehensive Economic and Trade Agreement (CETA) recently signed between Canada and the European Union will lead to many more job losses than estimated earlier. This could throw the future of the deal into jeopardy, as the EU Parliament still has to vote on the deal in February; the commission has already recommended Parliament votes against CETA.
There was no data released from New Zealand yesterday, leaving the ‘Kiwi’ moving listlessly throughout the day’s trade. The fall in dairy prices at the latest auction continued weighing on the New Zealand Dollar, although weakness in other currencies like the Canadian Dollar and the Euro enabled the ‘Kiwi’ to notch up some minor gains.
January 5th 09.30 AUD AiG Performance of Service Index (DEC)
January 5th 20.10 EUR Markit Eurozone Retail PMI (DEC)
January 5th 20.30 GBP Markit/CIPS UK Services PMI (DEC) 54.7
January 6th 02.00 USD ISM Non-Manufacutring Composite (DEC) 56.7
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