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Risk Demand High Ahead of Trump News Conference

Posted by at January 12th, 2017. Connect with us on .

australian dollar exchange rate news

Australian Dollar

A sharp rebound for iron ore prices pushed the Australian Dollar into a strong advance yesterday. Spot prices for the mineral jumped 3.2%, building upon the previous day’s increase of 2.1%, to break above US$80 per tonne for the first time since the 19th of December. Lower grade iron ore prices also saw a strong rise, climbing 3.3%. The move was in reaction to Chinese official’s plans to cut steel capacity again; this could see a rush for the commodity ahead of the clampdown, while pushing prices up due to fewer suppliers having to meet the same level of demand.

Australian credit card balances and purchases data is the only scheduled release for today.

Sterling

The Australian Dollar Pound Sterling exchange rate stormed higher yesterday, thanks to a mixed bag of UK data released in the evening. The data was split down the middle, with industrial and manufacturing production leaping over forecasts, while the latest trade figures significantly disappointed. Industrial production clocked in at 2% year-on-year, compared to forecasts of 0.6%, but the total trade balance yawned wider from -£1.55 billion to -£4.17 billion. Even news that the government was expecting the Supreme Court to uphold the High Court’s ruling on Parliamentary approval for the invocation of Article 50 failed to rescue the Pound.

There is no UK data scheduled for release today.

Euro

The latest Global Risk Report from the World Economic Forum (WEF) served to reinforce trader fears that populism in the Eurozone is a legitimate threat this year. The forum noted that, while populist parties have yet to win any elections in EU member states, fringe candidates had already managed to undermine the political order and even force more centrist governments to adopt some of their policies in a bid to derail their advancing popularity. A lack of data left the outlook for the currency bloc firmly on trader’s minds, keeping the Euro on the decline.

The accounts from the latest European Central Bank (ECB) monetary policy meeting will be released late tonight. If the minutes show that policymakers remain unimpressed with signs of strengthening inflation in the Eurozone, the Euro could fall.

US Dollar

Commodity market developments kept demand for the Australian Dollar strong, but elsewhere the US Dollar notched up some notable gains. Traders were desperately awaiting the day’s news conference from President-Elect Donald Trump; the first such event in six months. Although it was expected there would be lots of questions about the more controversial aspects of Trump’s policies, such as plans for a Muslim registry, Mexican border wall and mass deportations, traders were most interested in his promises of fiscal stimulus. Hopes Trump would reaffirm his commitment to spending anything up to US$1 trillion on the economy kept the US Dollar afloat.

A forecast fall in the number of continuing jobless claims made in the last week of December could support the US Dollar early on Friday morning.

Canadian Dollar

Although weaker against its commodity brethren, the Canadian Dollar was able to strengthen on a combination of healing oil market sentiment and domestic data. Crude oil bounced from monthly lows to record notable gains. Domestic data showed an above-forecast number of housing starts in December of 207,000 – nearly 20,000 over predictions – while the previous month’s figure was revised higher to 187,300. Canadian building permits figures for November also printed positively, with a -0.1% decline on the month – a significant improvement on forecasts of -2.4%. October’s growth was also upwardly revised, rising from 8.7% to 10.5%.

Friday’s early-morning Canadian new housing price index is expected to remain virtually unchanged on the month and the year, so the ‘Loonie’ may not find much support from the domestic data.

New Zealand Dollar

Bill English made his first overseas trip as New Zealand Prime Minister yesterday, meeting with European Council President Donald Tusk. Investors were cheered by the news that the two remain committed to starting negotiations for a free trade deal this year. The European Union is New Zealand’s third-largest trading partner, so the prospect of tariff-free trade would therefore significantly improve revenue for New Zealand’s exporters. This helped boost the New Zealand Dollar yesterday.

The ANZ truckometer heavy for December is set for release this morning.

Data Released

January 12th 08.00 NZD ANZ Truckometer Heavy (MoM) (DEC)
January 12th 12.30 AUD Credit Card Purchases (NOV)
January 12th 23.30 EUR ECB account of the monetary policy meeting
January 13th 00.30 USD Continuing Claims (DEC 31) 2118k
January 13th 00.30 CAD New Housing Price Index (YoY) (NOV) 3%

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