Aussie gains on better GDP report

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Today’s Economic events

  • Japan Monetary base y/y 29.0% vs. 27.90%
  • Australia New home sales m/m 3.10% vs. 6.0% previously
  • Australia GDP q/q 0.60% vs. 0.50%
  • Switzerland GDP q/q 0.40% vs. 0.20%
  • UK Construction PMI54.2 vs. 55.5
  • Eurozone PPI m/m -1.0% vs. -0.90%
  • BoE Member Broadbent speech
  • US ADP nonfarm payroll change 214k vs. 185k

Coming up

  • BoE Member Cunliffe speech
  • US Crude Oil inventories

The markets opened today with the risk-of mode as the Yen eased back strongly. Asian equity markets closed in the green with the Nikkei and the Shanghai Composite, both rallying 4.11% and 4.24% respectively. USDJPY posted strong gains from yesterday and briefly tested the highs of 114.54 before easing back. The Greenback is currently up 0.04% to the Yen.

The Australian Dollar got an unexpected surprise as the quarterly GDP data released earlier today showed a better than expected print. Data released by the ABS today showed the Australian economy expanding at a pace of 0.60% for the fourth quarter of 2015, rising above the forecasts of 0.40%.

The GDP boost came with household spending contributing the most. Less than 24 hours earlier, the RBA had left interest rates unchanged as the board decided to watch for more economic data to unfold. AUDUSD gained 0.64% for the day, trading at 0.722, following a brief test to session highs of 0.7239. NZDUSD, on the other hand, was trading weaker, down -0.30% for the day, as the Kiwi continued to fall steadily since the open. Yesterday’s GDT price index showed an increase of 1.40% a modest increase from -2.80% declines previously.

In Europe, the Euro continued to trend weaker against the Dollar. EURUSD is down -0.08% for the day, trading at 1.085. The single currency continued to weaken as comments from Benoit Coeure the ECB executive board member hinted that the Central Bank was looking at schemes used in other jurisdictions to mitigate any consequences from using negative interest rates. The comments were seen as a hint that the ECB could cut rates deeper into the negative at its meeting next week.

GBPUSD is up 0.52% for the day as the Cable managed to recover, currently trading at 1.402. The gains in the Cable come as UK’s construction PMI fell to 54.2, down from the forecasted 55.5. The Cable, however, shrugged aside the data and continued to regain the lost ground from last week. European equity markets were mixed today as the German DAX gained 0.34% for the day while the FTSE100 is down -0.36%.

The NY trading saw the release of the ADP private payrolls, which surged to 214k jobs, above estimates of 185k. However, previous month’s numbers were revised lower from 205k to 193k. The Greenback did not react much to the data.

Gold prices are trading 0.06% higher at the time of writing, trading at $1232 an ounce, following the declines from 1246 yesterday. WTI Crude Oil prices are also stronger, gaining 0.27% trading at $34 a barrel ahead of the weekly inventory report which is expected to show a buildup of 2.5 million barrels, down from 3.5 million in inventory from last week.

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John has over 8 years of experience specializing in the currency markets, tracking the macroeconomic and geopolitical developments shaping the financial markets. John applies a mix of fundamental and technical analysis and has a special interest in inter-market analysis and global politics.

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