AUD Sinks on Low Risk Appetite, but NZD Soars on Rail Windfall

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Headlines

  • Australian Dollar Sinks as Risk Appetite Cools – Markets worried by China’s economy
  • AUD/GBP Slips as UK Government Acquiesces to MPs – Government will publish Brexit industrial analyses
  • Signs of German Progress Fail to Undermine AUD/EUR – Angela Merkel may be able to secure third ‘grand coalition’
  • New Zealand Dollar Climbs on Government Rail Report – Labour publish findings from report that shows NZ$1.5 billion in hidden benefits from rail

Australian Dollar

It was an incredibly quiet day yesterday in terms of global economic data, which boded ill for the Australian Dollar. Risk-aversion weighed on the commodity-correlated ‘Aussie’, with growing concerns about China’s economic growth dragging mining shares lower, as did the fact that a likely interest rate hike from the US Federal Reserve is now under three weeks away.

ANZ Roy Morgan consumer confidence figures for the previous week are due out soon, although these may be overshadowed by the approach of high-tier Eurozone and US data.

Sterling

The Australian Dollar slipped lower versus Pound Sterling yesterday, as markets reacted positively to news that the UK government would release its Brexit impact analyses. The 50-plus reports had been kept private, but a vote in the House of Commons has forced Downing Street to hand over its findings, which could help businesses better prepare for Brexit and give investors clearer direction when buying or selling GBP.

Brexit and political news are likely to be the key drivers of Pound Sterling movement today, given the lack of UK data on the calendar.

Euro

While the Euro was able to make bullish gains versus the Australian Dollar, elsewhere the common currency was on poor form. It seems that German Chancellor Angela Merkel may be able to form another ‘grand coalition’ with the Social Democrats, but markets were wary of getting ahead of themselves, so left the EUR well alone.

As well as the German GfK consumer confidence index due out today, the Euro could see significant movement in response to the latest Organisation of Economic Co-operation and Development (OECD) Economic Outlook.

US Dollar

Gloom seemed to be the theme for most of the major currencies yesterday, with market blues weighing on the US Dollar as well. High Fed rate hike odds weren’t enough to prevent USD losses against a number of its peers, even though the ‘Greenback’ was able to advance against the ‘Aussie’. New home sales data for October provided little support, despite slowing from 14.2% to 6.2% in October instead of registering a -6.1% decline as economists had expected.

The advance goods trade balance for October could upset the US Dollar late this evening, given that the forecast is for a widened deficit of –US$65.1 billion.

Canadian Dollar

Weakness in the crude oil markets unsurprisingly dragged the Canadian Dollar lower yesterday, with no support available from the day’s empty data calendar. WTI Crude had fallen -2%, while Brent Crude had weakened -1%, on the news that US oil production has climbed 15% since the middle of 2016 and is likely to rise further as more rigs are brought into use by firms in response to strong crude prices.

The only Canadian data on the calendar today will be the industrial product prices and raw materials price index figures for October. CAD may therefore be more influenced by the latest developments in the crude oil markets.

New Zealand Dollar

Unlike many of its major currency peers, the New Zealand Dollar was on buoyant form yesterday after the new Labour government promised to invest heavily in rail. The government released a report commissioned in 2016 that shows rail can bring an annual windfall of NZ$1.5 billion in hidden benefits, such as reducing greenhouse gas emissions and reducing road damage thanks to having fewer cars and lorries on the road. Revitalising the nation’s transport infrastructure could provide serious economic benefits.

Data Released

November 28th 08.30 NZD ANZ Roy Morgan Weekly Consumer Confidence Index (NOV 26)
November 28th 20.00 EUR OECD Economic Outlook
November 28th 23.30 USD Advance Goods Trade Balance (OCT) -US$65.1b
November 28th 23.30 CAD Industrial Product Price (MoM) (OCT)

Post by TorFX

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