AUD Climbs Higher on Rising Australian Consumer Confidence

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Headlines

  • ‘Aussie’ Up on Consumer Confidence Rise – Risk-appetite before FOMC also boosted AUD
  • AUD/GBP Climbs despite Pound Strength – Wage growth acceleration helps lessen inflationary squeeze
  • AUD/EUR Bullish ahead of US FOMC Announcements – Strong Eurozone industrial production figures not enough to rescue Euro
  • USD Slumps as Core Consumer Price Growth Unexpectedly Slows – Markets held their breath ahead of FOMC decision

Australian Dollar

A strong uptick in consumer confidence and appetite for risk-assets boosted the Australian Dollar against its peers yesterday. The Westpac consumer confidence index for December rose 3.6% to 103.3, more-than counterbalancing the -1.7% drop seen in November.

As well as reacting to the latest monetary policy announcements from the US Federal Open Market Committee (FOMC), the Australian Dollar will also have to contend with high-impact employment change and unemployment rate figures for November.

Sterling

AUD/GBP managed to hold notable gains yesterday, despite Pound strength elsewhere. The latest UK wage growth data showed a stronger-than-expected rate of pay growth including bonuses in the three months to October. This means that the fall in real wages has slowed, alleviating some of the pressure on household budgets.

This evening sees the Bank of England (BoE) announce its latest monetary policy decisions. With the Bank only expecting to have to hike interest rates twice more by 2020, the chances of upbeat comments here seem slim.

Euro

The Euro was kept weak yesterday by the approach of the evening’s US interest rate news, despite some strong industrial production figures from the Eurozone. Output in the currency bloc grew 0.2% on the month in October, beating forecasts of 0.1%, while year-on-year growth clocked in at 3.7% instead of the predicted 3.2%.

The European Central Bank (ECB) will publish the outcome of its latest policy gathering this evening, which could keep the Euro on muted form in the run-up.

US Dollar

The US Dollar was unsurprisingly on weak form yesterday ahead of the FOMC announcements. Uncertainty over the long-term monetary policy outlook weighed on markets. Appetite for USD cooled further after the November core CPI growth was revealed to have unexpectedly slowed from 1.8% to 1.7%.

US advance retail sales data for November will be released late tonight, but the ‘Greenback’ could still be in the grips of market fallout from the latest FOMC decision to give it much attention.

Canadian Dollar

Once again the Canadian Dollar was immune from the risk appetite boosting its commodity currency brethren. Changes in USD value could have a severe impact upon cross-border trade for Canadian firms, giving the ‘Loonie’ a bigger stake than other currencies in the latest interest rate decisions. CAD therefore recorded strong losses.

Bank of Canada (BOC) Governor Stephen Poloz is set to give a speech early tomorrow morning; markets will eagerly await this in case he drops cautious or confident hints on monetary policy.

New Zealand Dollar

Risk-appetite boosted the New Zealand Dollar yesterday, even if the day’s domestic data was not overly impressive. Although the decline in food prices on the month slowed in November, prices still declined -0.4% - a bad sign for inflationary pressures.

Data Released

December 14th 10.30 AUD Employment Change (NOV) 19,000
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 14th 23.30 USD Retail Sales Advance (MoM) (NOV) 0.3%
December 15th 03.25 CAD Bank of Canada's Poloz Speech to Canadian Club of Toronto

Post by TorFX

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