Turning around the Aussie

13 October, 2015

The Aussie’s relentless run higher seen over the past near two weeks has been brought to an abrupt halt by the latest batch of weak data from China. The trade data showed imports slumping by 20% in YoY terms, after a 14% decline in the previous month. Although impacted by the recent fall in commodity prices, the data reflect the view that domestic demand is also weakening. As for the Aussie, it’s not a surprise to see the recent rally running out of steam, with a high seen at 0.7382, from having been below the 0.70 level towards the end of last month. In the bigger picture, the reasons to be bearish on the Aussie are diminishing, especially in light of the deprecation seen in recent years.

Elsewhere, the single currency continues to perform well relative to others and also the dollar, stopping just shy of the 1.14 level yesterday. The average true range (1 month, simple) for EURUSD is at the low for the March to October period, just above 1 big figure. This is a reflection of the removal of near-term Fed hike expectations, which has reduced the dollar’s sensitivity to data. For today, the focus is on inflation data in the UK at 08:30 GMT, with headline inflation seen going nowhere at 0.0% YoY and PPI data also seen at the same time. Sterling has also managed to hold its ground recently, cable having reversed the push towards the 1.50 level. It’s worth keeping an eye on the core inflation rate on the CPI data, which is expected to nudge higher to 1.0% to 1.1%. This is what the Bank are leaning on with regards to their forward optimism on prices. The only other focus will be the ZEW data at 09:00 GMT in Germany as a reflection of confidence in the overall economy.


Source link  
Economic calendar is relatively light

Today is Martin Luther King’s Birthday, which is a Bank Holiday in the United States. As a result, the Economic Calendar is relatively light today...

US Tax Bill passes

On Wednesday, the US Senate approved the tax bill 51 for and 48 against, while the House of Representatives gave it final approval, passing it for the second time in two days after...

US dollar 'treading water'

USD is treading water ahead of the expected enactment of President Trump’s tax bill. The initial euphoria of lower corporation tax, that many...


CB Monetary Policy Unchanged

Thursday saw the latest Monetary Policy Committee (MPC) report from the Bank of England. The BoE stated that further modest increases...

No Surprises as Fed Raises Rates

The Federal Reserve, as expected, raised its benchmark interest rate by a quarter of a percentage point, to a range of 1.25% to 1.5%. The latest hike...

CB meetings dominate the week

With no impactful economic data releases on the calendar today, the markets are focusing on a plethora of Central Bank meetings scheduled...


No Surprises from BoC & ADP

In an unsurprising move, the Bank of Canada decided to hold its benchmark lending rate at 1%, after two small hikes earlier in 2017. The BoC stated...

Moderate Gains for USD

On Monday, the US Commerce Department released Factory Orders data for October, indicating that the continued strength in the Manufacturing...

OPEC Extends Output Cuts

On Thursday, OPEC (Organization of Petroleum Exporters) and non-OPEC producers led by Russia agreed to keep output cuts until the end of 2018...

  


Share: