The Dollar and the FOMC Meeting Minutes in Focus for the Day

Earlier in the Day:

Economic data out of Australia this morning was limited to October’s consumer sentiment figures, but off the back of yesterday’s upbeat business confidence numbers for September, there will be hopes of a boost to domestic consumption in the wake of the figures released. It’s in fact the first time since late last year that optimists outnumbered pessimists, with the upbeat sentiment supported by the positive global economic outlook coupled with easing concerns of an imminent RBA rate hike.

It’s certainly good news following a slump in retail sales in August, according to figures released last week, with retail sales considered to be the thorn in the Australian economy’s side when looking at growth projections for this year and next.

The Aussie Dollar moved from $0.77994 to $0.78048 upon release of the data, before falling back to sub-$0.78 levels despite a softer U.S Dollar, with sentiment towards monetary policy holding back more solid gains through the session.

For the Kiwi Dollar, New Zealand and the markets remain on tender hooks, with New Zealand First Party leader Peters saying that a decision on which party they will join to form a coalition will be made on Thursday. Despite the uncertainty, the Kiwi Dollar was up 0.13% at $0.7079 at the time of writing, with a slump in the U.S Dollar attributed to the intraday gains.

With the FOMC meeting minutes scheduled for release later today and China’s trade data due out on Friday, there’s certainly plenty for the markets to consider and that’s before factoring in concerns over a pickup in geo-political risk.

The Day Ahead:

It’s a busy day ahead for the markets, with the EUR finding relief off the back of news that the Catalan president Puigdemont has taken dialogue over a call for independence, following threats from Spanish Prime Minister Rajoy’s over the weekend.

Plenty of uncertainty remains on what lies ahead for the Catalans, with Puigdemont stating that he will declare independence despite intentions to negotiate with the Spanish government.

With market concerns over greater unrest in Spain easing over the near-term, economic data out of the Eurozone has also been upbeat, with ECB executive board member Lautenschlaeger adding to the upside, saying that the ECB should begin to taper its asset purchasing program next year.

Economic data out of the Eurozone this morning includes French nonfarm payroll figures for the 3^rd quarter and finalized September inflation numbers out of Spain, which could provide further support for the EUR and market expectations of an imminent announcement by the ECB on its monetary policy outlook for next year.

Across the Channel, sentiment towards the Pound also improved following yesterday’s production figures, despite disappointing trade data, with the British Prime Minister managing to bring a degree of unity to the Party, at least for now.

There are no material stats out of the UK this morning however to provide the Pound with direction, leaving the Pound down 0.05% at $1.3196 at the time of writing.

Across the Pond, the key driver for the Dollar will be the release of the FOMC meeting minutes later today, with the August JOLTs job openings also of interest following the weak nonfarm payroll numbers last week that had been attributed to Hurricanes Harvey and Irma.

While the Dollar Spot Index is down 0.07% at 93.229 at the time of the report, expectations are for the Dollar to begin finding its feet, though much will depend on the U.S administration’s tax reforms on whether the Dollar can outpace the EUR and the ECB’s likely shift in monetary policy before the end of the year, with a FED rate hike in December now largely priced in.