Neutral RBNZ Outlook Boosts New Zealand Dollar

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Headlines

  • Chinese Trade Data Betters Forecast to Shore up AUD Exchange Rates – Optimistic RBA commentary could extend Australian Dollar gains
  • New Zealand Dollar Benefits as RBNZ Shows Greater Positivity – Weaker card spending could dent NZD exchange rates
  • Contracting House Price Index Limits Pound Sterling Demand – Investors continue to fret over UK outlook
  • Euro Under Pressure After German Exports Unexpectedly Slump – Tensions mount over Italian budget issue


Solid Chinese Imports Boost Australian Dollar

Better-than-expected Chinese import and export data encouraged the Australian Dollar to push higher across the board yesterday. Although key iron ore imports declined this was not enough to prevent the commodity-correlated AUD strengthening as market risk appetite picked up. With markets hopeful that the US and China could dial down trade tensions in the near future the mood of AUD exchange rates naturally improved.

If the latest Reserve Bank of Australia (RBA) Statement of Monetary Policy proves positive, suggesting that policymakers are taking a more optimistic view, this could give the Australian Dollar a fresh boost.

Pound Softens as UK House Price Index Contracts

Signs continue to point towards a weaker UK housing market, with October’s RICS house price balance showing an unexpectedly sharp -10% decline on the month. This weakness suggests that domestic sentiment remains muted, with consumers opting to hold off on house purchases as Brexit-based uncertainty mounts. Mixed messages over the likelihood of an imminent agreement also put pressure on the Pound overnight as the threat of a no-deal Brexit continues to hang over the domestic outlook.

A rallying point could be in store for GBP exchange rates today, however, if the third quarter UK gross domestic product accelerates as forecast.

Disappointing German Trade Weighs Down Euro

Germany’s latest trade data failed to encourage demand for the Euro, with investors disappointed by a surprise -0.8% contraction in exports on the month. As the Eurozone’s powerhouse economy continues to show signs of coming under pressure from global trade tensions the mood towards the single currency naturally soured. Worries over the Italian budget escalated, meanwhile, after the European Commission forecast Italian growth of just 1.2% in 2019.

If tensions between the Italian government and other EU officials continue to mount this could see the Euro losing further ground over the course of the day.

US Dollar Remains Muted on Political Outlook

The US Dollar struggled to recover any particular ground as the initial impact of the midterm elections result faded. As markets still expect to see political deadlock in Washington confidence in the prospect of the US economy continuing its rapid growth diminished. Even so, as the latest jobless claims data still indicates a tighter US labour market USD exchange rates found some measure of support.

As forecasts point towards a dip in tonight’s University of Michigan consumer sentiment index this could limit the upside potential of the US Dollar ahead of the weekend.

Canadian Dollar Sees Limited Movement on Mixed Housing Data

September’s new housing price index did not offer the Canadian Dollar any cause for confidence last night, with prices found to have stagnated once again on the month. This softness highlights the vulnerability of the domestic housing market, raising concerns over the health of the wider Canadian economy. However, a surprisingly strong uptick in housing starts in October helped to cushion the impact of the data and give CAD exchange rates a boost.

As long as oil prices continue to slide in response to global oversupply concerns, however, the strength of the Canadian Dollar is likely to remain limited.

Neutral RBNZ Outlook Supports NZD Exchange Rates

As expected, the Reserve Bank of New Zealand (RBNZ) adopted a slightly more upbeat tone at its November meeting, reacting to the positivity of recent domestic data. However, as the central bank remains firmly in neutral territory the option of an interest rate cut remains on the table. This limited the boost to the New Zealand Dollar yesterday, even as the wider sense of market risk appetite improved.

An easing in retail card spending growth may put a fresh dampener on NZD exchange rates this morning.


Data Released

November 9th 08:45 NZD Retail Card Spending (MoM) (OCT) 0.6%
November 9th 11:30 AUD Reserve Bank of Australia Statement of Monetary Policy (NOV) 
November 9th 20:30 GBP Gross Domestic Product (QoQ) (3Q) 0.6%
November 10th 02:00 USD University of Michigan Consumer Sentiment (NOV P) 97.9

Post by TorFX

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