AUD and GBP Climbs as EU States Brexit Trade Talks Won’t Start Until February

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Headlines

  • ‘Aussie’ Rises on Chinese Trade Figures Coal, copper and iron ore imports rise
  • AUD/GBP Climbs on Brexit Negotiation Developments EU won’t start trade negotiations for at least two months
  • AUD/EUR Makes Minor Gains Poor German trade data weighs on Euro
  • USD Boost from Strong NFP Short-Lived Better-than-expected jobs growth in November

Australian Dollar

The Australian Dollar received a boost on Friday afternoon thanks to the results of the latest Chinese trade data. Growth in imports for the Asian superpower was expected to slow from 17.2% to 13% in November, but instead rose to 17.7%. A large part of this uptick was due to a rise in copper, iron ore and coal imports - good news for Australian producers. AUD lost some of its gains overnight, however, after the latest US domestic data proved favourable.

Reserve Bank of Australia (RBA) Governor Philip Lowe will give a speech in Sydney on Wednesday.

Sterling

AUD/GBP was able to record some sizeable gains at the end of the week, although the pairing trended turbulently throughout the day and night. The Pound was busy reacting to the news that the European Commission believed the UK had made sufficient progress for the European Council to vote to progress Brexit negotiations on to the issue of trade. However, the optimism that this generated was swiftly dashed when the EU revealed the talks on trade could not begin until February.

On Thursday the Bank of England (BoE) will release details of its latest monetary policy decisions.

Euro

The Euro was on soft form at the end of the week thanks to disappointing German data. Exports surprisingly declined again on the month in October, while import growth picked up. Overall this meant that the German trade surplus fell much further than forecast, which also dragged the current account surplus down. Positive US data further weighed on demand for the common currency.

The European Central Bank (ECB) will announce its latest monetary policy decisions on Thursday. Markets will be keen to see if policymakers have debated setting a fixed end date for the quantitative easing programme.

US Dollar

The latest US non-farm payrolls report showed an above-forecast rate of job creation, firming the rosy outlook for the US economy and boosting demand for the US Dollar. While average hourly earnings growth disappointed on the month and the year, the labour market added 228,000 new jobs in November. The consensus amongst economists had been for an increase of 195,000.

The latest Federal Reserve monetary policy decisions will be announced early on Thursday morning. Markets are expecting a rate hike - so much so that a round of tightening is unlikely to boost the US Dollar much. Should the Fed signal that there are more hikes to come in 2018, however, this could give the ‘Greenback’ a strong boost.

Canadian Dollar

Strong housing data wasn’t enough to put the Canadian Dollar on the uptrend across-the-board, with the ‘Loonie’ only able to record gains versus the weakened Pound Sterling and Euro. 252,200 new housing construction projects began in November, beating forecasts for 213,000 and proving a surprise uptick on the 222,700 starts seen in October.

It’s a very sparse week for Canadian data this week, with November’s existing home sales data due out at midnight on Saturday being the most influential report on offer over the coming days.

New Zealand Dollar

The only New Zealand data released on Friday was of little influence, but the New Zealand Dollar was able to record respectable gains against its peers. Like Australia, New Zealand benefits from strong trade links with China, so data showing thriving imports bodes well for domestic trade reports.

New Zealand will have to wait until Friday for its first piece of impactful data to be released. The Business New Zealand performance of manufacturing index for November will be due out.

Data Released

December 13th 08.15 AUD RBA Governor Lowe Gives Speech in Sydney
December 14th 05.00 USD FOMC Rate Decision (Upper Bound) (DEC 13) 1.50% December 14th 22.00 GBP Bank of England Bank Rate (DEC 14) 0.50%
December 14th 22.45 EUR European Central Bank Rate Decision (DEC 14) 0.00%
December 15th 07.30 NZD BusinessNZ Manufacturing PMI (NOV)
December 16th 00.00 CAD Existing Home Sales (MoM) (NOV)

Post by TorFX

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