AUDUSD (0.70): The Aussie dollar is poised to close the week on positive gains led by a better than expected jobs report and a decline in the unemployment rate. The AUDUSD briefly tested the highs above 0.70 before consolidating. Home loans grew at a smaller pace of 0.3% while inflation expectations eased from 3.8% to 3.2%. With the RBA putting rate cuts on hold for the time being, the Aussie is looking to rally on positive data as well as being supported by a risk off sentiment during the week.
- AIG Construction index 53.8 vs. 47.1 previously
- ANZ Job advertisements m/m 1.0% vs. -0.5% previously
- NAB Business confidence 1 vs. 4 previously
- Westpac consumer sentiment -5.6% vs. 7.8% previously
- Home loans m/m 0.3% vs. 0.8%
- MI Inflation expectations 3.2% vs. 3.8% previously
- Employment change 17.4k vs. 5.2k
- Unemployment rate 6.2% vs. 6.2%
EURUSD (1.12): The Euro was up 1.13% at the time of trading, with low volatility for the week against the US Dollar. The single currency posted steady but slow gains over the week after finding support near 1.1132 to post a weekly high to 1.13 briefly. The quarterly GDP data for the Eurozone managed to surprise, rising 0.4% beating estimates. However Germany’s inflation remained flat while wholesale prices fell -0.8%.
- German industrial production m/m 0.7% vs. 1.2%
- Sentix investor confidence 13.6 vs. 16.2
- German trade balance 22.8bn vs. 21.8bn
- Eurozone revised GDP q/q 0.4% vs. 0.3%
- German final CPI m/m 0.0% vs. 0.0%
- German WPI m/m -0.8% vs. 0.2%
- Italy industrial production m/m 1.1% vs. 0.9%
NZDUSD (0.629): The Kiwi dollar had a volatile week as the currency fell off the highs near 0.6423 to post weekly lows below 0.6262 before stabilizing. The RBNZ cut interest rates by 25bps and signaled further cuts. The Kiwi saw some heavy selling on the RBNZ’s decision but was supported by the risk off sentiment this week. Other economic data included manufacturing sales which grew at a pace of 0.4% for the quarter and also a modest improvement in the Kiwi manufacturing.
- Manufacturing sales q/q 0.4% vs. -2.6% previously
- RBNZ Official cash rate 2.75% from 3.0%
- Business NZ Manufacturing 55.0 vs. 53.7 previously
- FPI m/m -0.5% vs. 0.6%
USDJPY (120.6): The Yen was trading mixed to the US Dollar this week but remains firm to close on a weaker note. USDJPY tested highs of 121.255 before easing back lower to trade near 120.62 at the time of writing. Japan’s third quarter GDP released showed a moderate contraction of -0.3% for the quarter. Some officials were seen commenting about the need for the Bank of Japan to increase its QQE purchases at the meeting in October. The Yen initially reacted to the news only to settle back at the current levels.
- Leading indicators 104.9% vs. 104.9%
- Current account 1.32Tn vs. 1.25Tn
- Final GDP q/q -0.3% vs. -0.4%
- Bank lending y/y 2.7% vs. 2.6% previously
- Final GDP Price index y/y 1.5% vs. 1.6%
- Economy watchers sentiment 49.3 vs. 52.1
- Consumer confidence 41.7 vs. 40.6
- Prelim machine tool orders y/y -16.5% vs. 1.7% previously
- Core machinery orders m/m -3.6% vs. 3.4%
- PPI y/y -3.6% vs. -3.2%
- BSI Manufacturing index 11.0 vs. -1.9
USDCAD (1.32): The USDCAD was trading flat with gains of 0.02% for week at the time of writing. The Bank of Canada left interest rates unchanged at its meeting but the market expectations are pointing to another rate cut in October which has kept the Canadian dollar somewhat contained, despite volatility in the Crude Oil prices. Data this week included the building permits which fell less than expected at -0.6% and a modest recovery being seen with an upbeat print on the housing starts.
- Housing starts 217k vs. 194k
- Building permits m/m -0.6% vs. -4.7%
- BoC Rate, 0.5%, unchanged
- NHPI m/m 0.1% vs. 0.2%
- Capacity utilization rate 81.3% vs. 81.8%
GBPUSD (1.54): The British Pound staged a strong rally this week recovering most of the declines over the past two weeks as GBPUSD briefly tested the highs of 1.54 before easing back lower. Data this week included the Bank of England’s MPC meeting where interest rates were left unchanged and only one dissenter voting for a rate hike. The tone of the BoE was however hawkish, in that the bank brushed aside any risks from the slowdown from China. However, manufacturing and industrial production data declined sharply for the month as well construction output which was ignored by the markets.
- Manufacturing production m/m -0.8% vs. 0.2%
- Industrial production m/m -0.4% vs. 0.1%NIESR GDP estimate 0.5% vs. 0.6% previously
- RICH House price balance 53% vs. 46%
- Halifax HPI m/m 2.7% vs. 0.5%
- MPC Official bank rate votes 1 – 8
- MPC Bank rate 0.05%, unchanged
- Construction output -1.0% vs. 0.5%
- Consumer inflation expectations 2.0% vs. 2.2% previously
USDCHF (0.978): The Swiss Franc was weaker as the USDCHF surged 0.70% at the time of writing to test the weekly highs of 0.979. There were no major economic releases from Switzerland this week with the unemployment rate staying unchanged at 3.3% for the month. The Swiss franc was weaker across the board as a moderate risk off sentiment kept the safe haven currency well offered.
- Foreign currency reserves 540bn vs. 531bn previously
- Unemployment rate 3.3% vs. 3.3%
US Dollar Index (95.5): The US Dollar was trading weaker this week despite an overall positive week as far as the economic data was concerned. Weekly unemployment claims continued to fall below estimates pointing to a continued strong growth in the US labour markets, a strong point for those arguing for a rate hike. Data released on Friday showed the monthly producer price index staying flat for the month on the headline, but rising 0.3% on the core. The Core PPI is expected to put pressure on the Core inflation data in the coming months and therefore could signal consumer prices potentially rising in the near term. The US Dollar Index could remain flat into next week’s main FOMC event.
- NFIB Small business index 95.9 vs. 96
- Labor market conditions index m/m 2.1 vs. 1.8 previously
- Consumer credit m/m 19.1bn vs. 18.4bn
- JOLTS job openings 5.75mn vs. 5.3mn
- Weekly unemployment claims 275k vs. 279k
- Import prices m/m -1.8% vs. -1.7%
- Wholesale inventories m/m -0.1% vs. 0.2%
- PPI m/m 0.0% vs. -0.1%
- Core PPI m/m 0.3% vs. 0.1%