AUD GBP and AUD EUR Rise as Markets Brace for Fed Powell Hearing

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Headlines

  • ‘Aussie’ Weak as Markets Await US Data – Slipping consumer confidence does nothing for AUD
  • AUD GBP Makes Solid Gains on OECD Economic Outlook – Brexit uncertainty to slow UK economy in 2018
  • AUD EUR Rises despite OECD Forecasts – Think tank predicts strong Eurozone growth next year
  • New Zealand Dollar Surges after Weeks of Selling – Markets capitalise on slow day to buy into NZD

Australian Dollar

The Australian Dollar was on mixed form yesterday, only making gains versus some of its major peers due to their weakness. The presence of several major developments on the US data calendar kept markets away from risky assets for much of the day. With the only domestic data being a slight decrease in the ANZ Roy Morgan weekly consumer confidence index for the week ending 26th November, there was nothing to give AUD a solid direction in which to trade.

Sterling

Despite its own weakness, the Australian Dollar was able to make solid gains versus Pound Sterling yesterday, thanks to the latest Economic Outlook from the Organisation for Economic Co-operation and Development (OECD). The think tank predicted that Brexit and inflation-weakened household spending is expected to see the economy slow further next year. This undermined the positivity generated by earlier news that all Britain’s major banks passed the latest Bank of England (BoE) stress tests for the first time since 2014.

UK net consumer credit figures could weaken the outlook for household spending today if they show that borrowing has fallen.

Euro

The Euro was mainly on positive form yesterday, but the approaching US data weighed more heavily on the common currency than on the ‘Aussie’. The AUD EUR exchange rate was therefore able to record fractional gains, even though the OECD Economic Outlook suggested the Eurozone economy is set to continue on rosy form during 2018. German consumer confidence figures for December also relieved by meeting forecasts of a hold at 10.7.

German inflation data is set for release today – strong price growth will boost the Euro on the hope that the European Central Bank (ECB) considers more adjustments to monetary policy.

US Dollar

Confidence that the Confirmation Hearing of nominee for the role of Federal Reserve Chair Jerome Powell would go smoothly boosted the US Dollar yesterday. A wider-than-expected advance goods trade deficit was counteracted by a strong unexpected uptick in consumer confidence during November, after the index climbed from 126.2 to 129.5. Powell’s prepared testimony sounded much like his predecessor Janet Yellen – whose term ends in February 2018 – which relieved markets, as Yellen is seen as a safe pair of hands and a continuation of the status quo would therefore be welcome.

Third-quarter US GDP figures will be released very late tonight, although USD may not react strongly, given that early tomorrow morning Janet Yellen will appear before the Joint Economic Committee of Congress.

Canadian Dollar

Appetite for the Canadian Dollar remained cold yesterday as markets awaited the latest Financial System Review from the Bank of Canada (BOC) and the subsequent press conference from Governor Stephen Poloz and Deputy Governor Carolyn Wilkins. A decline of -0.6% in Brent Crude and -0.4% in WTI Crude further incentivised investors to stay away from the ‘Loonie’.

New Zealand Dollar

Having taken a hammering over the past few weeks on concerns regarding the recent general election and subsequent Labour-led coalition, the New Zealand Dollar was on the rise yesterday. The ‘Kiwi’ took the opportunity to climb whilst its commodity brethren awaited the US data and the safer Pound Sterling and Euro were muted. There was no domestic data released to fuel the appreciation.

Reserve Bank of New Zealand (RBNZ) Governor Grant Spencer is set to appear before the Parliament Select Committee tomorrow; any clues regarding monetary policy could create turbulence for NZD.

 

Data Released

November 29th 10.00 NZD RBNZ Governor at Parliament Select Committee
November 29th 19.30 GBP Net Consumer Credit (OCT)
November 29th 23.00 EUR German Consumer Price Index (YoY) (NOV P)
November 29th 23.30 USD Gross Domestic Product Annualized (QoQ) (3Q S)
November 29th 01.00 USD Yellen Appears before Joint Economic Committee of Congress

Post by TorFX

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