Lowest NZ Business Confidence since Financial Crisis Causes NZD Tumble

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Headlines

  • ‘Aussie’ Advances on Chinese Manufacturing PMI – Domestic data also provides AUD boost
  • AUD GBP Weakens as Brexit Hopes Remain High – Divorce bill settlement potential cheers markets
  • AUD EUR Slides as Eurozone Data Proves Supportive – Eurozone core inflation beats forecasts
  • NZD Tumbles on Poor Business Confidence – Private sector worried by centre-left government

Australian Dollar

The Australian Dollar was largely on strong form yesterday, although it lost out against Pound Sterling and the Euro. Data was largely positive, with building approvals registering a strong uptick on the month, beating forecasts for a decline. Private sector credit and capital expenditure data showed a marginal softening, but the ‘Aussie’ also found support from a surprise rise in the Chinese manufacturing PMI.

The AiG performance of manufacturing index will be released shortly.

Sterling

AUD/GBP fell over half a per cent yesterday as markets continued to react positively to the increasing likelihood a Brexit bill could be agreed and exit negotiations moved on to trade in December. The positivity generated by this development was enough to see markets overlooking the GfK consumer confidence data, which revealed that sentiment had fallen back to its post-referendum worst.

The UK Markit manufacturing PMI for November will be released this evening. Markets tend to view the performance of this index as an indicator for the direction of the subsequent services PMI – released next week. Therefore a strong result here will boost GBP, but a weakening could cause the Pound to tumble, despite manufacturing accounting for less than 10% of UK GDP.

Euro

Eurozone data slightly disappointed forecasts yesterday, but not enough to prevent the Euro recording gains on the positive aspects of the day’s docket. German retail sales slumped in October, but unemployment fell by -18,000 in November compared to forecasts for -10,000. The Eurozone unemployment rate edged down to its lowest level in nearly nine years. Core inflation beat forecasts, but overall inflation failed to rise quite as much as expected.

The only Eurozone data set for release today consists of finalised versions of earlier reports, which could prove to be of little impact.

US Dollar

The US Dollar was on the decline yesterday as appetite for the Euro increased. This was despite positive releases from the US, with personal consumption expenditure printing at 1.4% as forecast, but with the previous month’s figure also being revised to 1.4%. Personal income in October held steady at 0.4%, instead of weakening to 0.3% as forecast.

Canadian Dollar

Oil prices were rising on the back of an announcement by OPEC that it was likely to extend its production cuts for another nine months, but the Canadian Dollar largely weakened. The latest current account balance figures were better-than-expected as well, with the deficit widening slightly less-than-predicted. However, expectation that today’s GDP figures will show weakening economic growth weighed on the ‘Loonie’.

Canadian GDP figures for September and the third quarter, as well as employment data, could keep CAD on volatile form tomorrow.

New Zealand Dollar

Dire business confidence survey results caused the New Zealand Dollar to slump yesterday, as the private sector fretted about the impact of having a centre-left government. The ANZ activity outlook slumped from 22.2 to 6.5, while business confidence fell from -10.1 to -39.3 – the lowest reading since the financial crisis.

The New Zealand terms of trade index for the third quarter is set for release shortly.

Data Released

December 1st 07.45 NZD Terms of Trade Index (QoQ) (3Q) 1.3%
December 1st 08.30 AUD AiG Performance of Manufacturing Index (NOV)
December 1st 19.00 EUR Italian Gross Domestic Product w.d.a. (YoY) (3Q F) 1.8%
December 1st 19.30 GBP Markit UK PMI Manufacturing s.a. (NOV) 56.5
December 1st 23.30 CAD Quarterly Gross Domestic Product Annualized (3Q) 1.6%

Post by TorFX

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