AUDUSD (0.7): The Australian dollar was initially trading stronger across the board as the RBA left interest rates unchanged at 2.0% and struck a fairly neutral tone in the markets. This week’s economic data from Australia also included manufacturing index which was at 50.2, down from 52.1 previously while services index was down 48.9 marking a contraction. Construction index was the bright spot rising 52.1 from 51.9 previously. The largely mixed but positive data however failed to lift the Aussie against a stronger Greenback with AUDUSD down -0.98% for the week.
- AIG Manufacturing Index 50.2 vs. 52.1 previously
- MI Inflation gauge m/m 0.0% vs. 0.3% previously
- Building approvals m/m 2.2% vs. 1.8%
- Commodity prices y/y -19.8% vs. -21.0% previously
- RBA leaves cash rate unchanged at 2.0%
- AIG Services index 48.9 vs. 52.3 previously
- Trade balance -2.32bn vs. -2.85bn
- AIG Construction index 52.1 vs. 51.9 previously
EURUSD (1.07): The Euro continues to remain weak as the monetary policy divergence starts to take center stage again. Economic data from Europe this week included the manufacturing and services PMI numbers. While Eurozone services PMI was soft at 54.1, manufacturing PMI increased to 52.3, beating estimates of 52.0. However, retail sales fell -0.1% and Germany industrial production took a hit, declining -1.1% largely due to the global economic slowdown. The Euro remained subdued against a hawkish US Dollar and is down -2.38% for the week, trading at 1.073.
- Spain manufacturing PMI 51.3 vs. 51.9
- Italy manufacturing PMI 54.1 vs. 52.9
- France manufacturing PMI 50.6 vs. 50.7
- Germany manufacturing PMI 52.1 vs. 51.6
- Eurozone manufacturing PMI 52.3 vs. 52.0
- Spain services PMI 55.9 vs. 55.5
- Italy services PMI 52.4 vs. 53.7
- France services PMI 52.7 vs. 52.3
- Germany services PMI 54.5 vs. 55.2
- Eurozone services PMI 54.1 vs. 54.2
- Eurozone PPI m/m -0.3% vs. -0.4%
- Germany factory orders m/m -1.7% vs. 1.1%
- Eurozone Retail PMI 51.3 vs. 51.9
- Retail sales m/m -0.1% vs. 0.2%
- Germany industrial production -1.1% vs. 0.6%
NZDUSD (0.65): It has been a bad week for the Kiwi as economic data this week was to the downside. The Global dairy trade index fell yet again, declining -7.4%, down from -3.1% previously. The quarterly labour market data was also subdued as the employment change fell -0.4% for the month and unemployment rate increased to 6.0% as expected. The quarterly labour cost index also rose less than expected by 0.4%. NZDUSD is down -3.71% for the week trading at 0.651 after the currency briefly traded near the opening highs of 0.676.
- ANZ Commodity prices m/m 6.9% vs. 5.5% previously
- GDT Price Index -7.4% vs. -3.1%
- Employment change q/q -0.4% vs. 0.4%
- Unemployment rate 6.0% vs. 6.0%
- Labor cost index q/q 0.4% vs. 0.5%
USDJPY (122.7): The Yen is finally showing signs of breaking out from its range, as USDJPY is up 1.72% for the week, trading at 122.7. There were no major releases from Japan this week and BoJ speeches were largely unchanged noting the optimism of reaching the 2.0% inflation target by 2016. Japan’s final manufacturing PMI managed to come out softly higher at 52.4, above estimates of 52.1 while consumer confidence increased to 41.5, above estimates of 41.1.
- Final manufacturing PMI 52.4 vs. 52.1
- Monetary base y/y 32.5% vs. 36.2%
- Consumer confidence 41.5 vs. 41.1
- Leading indicators 101.4% vs. 102.1%
USDCAD (1.32): USDCAD is up 1.42% at the time of writing, as the Loonie initially fell to post weekly lows near 1.304 but soon recovered on the back of a hawkish testimony from Janet Yellen. Economic data was weak for the most part as manufacturing PMI fell to 48, below estimates of 48.6 and the Ivey PMI was also soft at 53.1. Friday’s unemployment report from Canada saw the Canadian unemployment rate fall to 7.0% against estimates of 7.1%. The monthly number of jobs created also beat estimates, rising 44.4k. The building permits data was weak at -6.7%, which saw the Canadian dollar no match for the US Dollar as USDCAD currently trades at 1.326.
- Manufacturing PMI 48.0 vs. 48.6
- Ivey PMI 53.1 vs. 54.0
- Employment change 44.4k vs. 9.5k
- Unemployment rate 7.0% vs. 7.1%
- Building permits m/m -6.7% vs. 1.4%
GBPUSD (1.50): The British Pound turned very weak falling -2.43% for the week. While the construction, manufacturing and services PMI all came out with strong numbers, the BoE’s meeting and the inflation report were the main event risks. While the Bank of England kept rates unchanged at 0.5% with the MPC vote count also staying put at 1 – 8, the BoE’s inflation report sent the Pound tumbling lower. Governor, Mark Carney noted that inflation was expected to stay low at 1.0% into 2016 pushing back expectations of a rate hike next year. The Pound reversed its gains falling off the highs of 1.535 and remained weak into Friday’s NFP release which saw the Cable trade near 1.50.
- Manufacturing PMI 55.5 vs. 51.3
- Construction PMI 58.8 vs. 58.9
- Services PMI 54.9 vs. 54.6
- Halifax HPI m/m 1.1% vs. 0.7%
- BoE keeps interest rates unchanged at 0.5%
- BoE releases inflation report
- Manufacturing production m/m 0.8% vs. 0.4%
- Industrial production m/m -0.2% vs. -0.1%
USDCHF (1.0): USDCHF is up 1.8% at the time of writing, after Friday’s jobs report saw the Greenback reach parity trading above 1.005 at the time of writing. Data from Switzerland this week included retail sales which came out as expected; rising 0.2% annualized while the manufacturing PMI was also modestly higher at 50.7, above estimates of 50.2. Inflation was also a bright spot, rising 0.1% for the month.
- Retail sales y/y 0.2% vs. 0.2%
- Manufacturing PMI 50.7.vs. 50.2
- CPI m/m 0.1% vs. 0.0%
- Foreign currency reserves 551bn vs. 541bn previously
US Dollar Index (99.25): The US Dollar Index is up 2.27% at the time of writing, trading near 99.25. The Dollar remained well supported since the Fed’s FOMC meeting in October where the Federal Reserve left the door open for December rate hikes. This week’s economic data was mostly mixed with manufacturing PMI posting modest gains while non-manufacturing strengthened. US Factory orders declined -1.0%, hurt by the strong dollar but domestic construction spending increased 0.6%. Janet Yellen’s testimony to the Senate last week saw the Fed Chair taking a hawkish tone calling December ‘Live’ for a rate hike. Friday’s NFP reported cemented that view as the US unemployment rate dipped to 5.0%, while the monthly jobs posted 271k, more than the median estimates. The average hourly earnings also posted a strong increase, rising 0.4%, beating estimates of 0.2%.
- Final manufacturing PMI 54.1 vs. 54.0
- ISM Manufacturing PMI 50.1 vs. 50.0
- Construction spending m/m 0.6% vs. 0.5%
- Factory orders m/m -1.0% vs. -0.8%
- IBD/TIPP Economic Optimism 45.5 vs. 47.5
- ADP Non-farm employment change 182k vs. 183k
- Trade balance -40.8bn vs. -42.7bn
- Services PMI 54.8 vs. 54.6
- Fed Chair testifies to the Senate Banking Committee
- Weekly unemployment claims 276k vs. 263k
- Prelim nonfarm productivity 6% vs. 0.1%
- Prelim unit labor costs q/q 1.4% vs. 2.2%
- Average hourly earnings m/m 0.4% vs. 0.2%
- Nonfarm employment change 271k vs. 181k
- Unemployment rate 5.0% vs. 5.0%
