Australian Dollar:
The Australian Dollar fell to 3 week lows against the USD overnight closing at 0.7075 after a weak gold price and interest around the Reserve Banks next meeting. The AUD was trading above 0.71 for most of the Australian session but with the price of Gold falling for the second day in a row and keeping downward pressure on the AUD and saw it fall below that mark. The soft economic data including the local CPI data out earlier this week has seen speculation increase that the RBA will be forced to cut rates before the end of the year. With little data coming out today the focus will be on overseas markets including the Bank of Japan’s monetary policy statement coming out around lunchtime today.
We expect a range today of AUD/USD 0.7020 – 0.7150
New Zealand Dollar:
The New Zealand Dollar ended the day roughly where it started after the Reserve Bank of New Zealand (RBNZ) decided to keep interest rates on hold gave the currency some much needed support after the hawkish Federal Reserve statement. The RBNZ had cut rates at the last three meetings and while they did say that further cuts were likely they felt it was appropriate to keep rates on hold and watch the flow of economic data. Locally the focus will be on the ANZ business confidence data that is getting announce at 1:00pm today.
We expect a range today of NZD/USD 0.6610 – 0.6750
Great British Pound:
The Great British Pound recovered most of the ground lost the day before after the Federal Reserve’s decision to close at 1.5315. The market was looking for some strong economic data coming out of the US to support the potential rate increase in December however with the soft Advance GDP data coming out of the US we saw some profit taking by investors allowing the GBP to regain ground. Attention today will once again turn to the US to the Employment Cost Index q/q.
We expect a range today of GBP/AUD 2.1410 – 2.1750
Majors:
The Bank of Japan will be releasing there monetary policy statement today in which they could announce an expansion to the asset-purchase program they currently have to try and steer the Japanese economy to a stable inflation target of 2%. Weak data coming out of China is threatening to slow current growth so expansion of the current policy might be needed. There was a bit of focus on the US today after the hawkish statements made by the Federal Reserve about a potential rate hike in December. The market was looking for some data which would help support a rate hike decision however the data was mixed with the Advance GDP 0.1% below expectations (1.5% vs 1.6%) but unemployment claims growing by just 1,000 against expectations of 5,000. The Euro recovered a most of the ground lost after the Fed statement after the mixed data coming out of the US closing at 1.0976.
Data releases:
AUD: PPI q/q
NZD: ANZ Business Confidence
JPY: Monetary Policy Statement, BOJ Outlook Report
GBP: GfK Consumer Confidence
EUR: German Retail Sales, Spanish Flash GDP q/q, CPI Flash Estimate y/y, Unemployment rate
USD: Employment Cost Index q/q