Earlier in the Day: There were no material stats released out of the Asian session this morning, leaving the markets to focus on the RBA monetary policy
There were no material stats released out of the Asian session this morning, leaving the markets to focus on the RBA monetary policy decision and rate statement.
Recent data out of Australia had left sentiment towards the Australian economy and monetary policy mixed. While interest rates were left unchanged at 1.50%, the rate statement certainly gave the Aussie Dollar an initial boost, rising from $0.76808 to $0.76941 upon release of the statement.
Key points from the statement were as follows:
While there were no suggestions of a shift in policy, the general outlook on the economy and expectations of inflation to begin picking up were hawkish from the markets’ perspective. The very fact that the RBA recognises the degree of support from the current interest rate environment supports the no change view on monetary policy. Concerns over housing debt are all too evident recently and a lift in rates would likely hurt already weak consumer consumption further.
At the time of the report, the Aussie Dollar coughed up the gains sitting down 0.13% at $0.76881.
It’s another relatively quiet day on the economic calendar, with key stats out of the Eurozone limited to Germany’s Industrial Production figures for September and the Eurozone’s retail sales numbers.
Following Germany’s factory order numbers released on Monday, production numbers may come in ahead of forecasts, which could provide the EUR with support, with retail sales also expected to recover from August’s decline. While the stats may be EUR positive, the markets will be looking out for comments from ECB President Draghi, also scheduled to speak this morning. Any dovish commentary will likely reverse any intraday gains, the ECB President unlikely to talk up the EUR. October’s prelim inflation figures were disappointing enough for the ECB to maintain its dovish tones.
At the time of the report, the EUR was down just 0.02% at $1.1608, with a return to sub-$1.16 levels more than likely should Draghi discuss monetary policy.
For the Pound, stats through the day included October’s BRC Retail Sales Monitor numbers, which disappointed in the early hours of this morning, falling 1% against a forecasted 0.9% increase. The figures follow on from some quite dire government retail sales data for September, a concern for the BoE.
House price figures later this morning are unlikely to have a material bearing on the Pound, which continues to be jostled by sentiment towards Brexit and BoE monetary policy. At the time of writing, the Pound was down 0.03% at $1.3167.
Across the Pond, it’s another relatively quiet day, with September’s JOLTs job openings the key stat for the day. With nonfarm payrolls and wage growth having been on the softer side in October, the markets will be looking for the job openings numbers to be solid. The weak numbers had been attributed to lingering effects of Hurricanes Harvey and Irma. Should we see the JOLT’s numbers disappoint, we would also expect the Dollar to soften.
With no other key stats for the markets to consider, the Redbook will also be an influence this afternoon, as the markets look for a pickup in momentum in the U.S economy, which certainly performed better than anticipated in the 3rd quarter.
At the time of writing, the Dollar Spot Index was up 0.02% at 94.772. While the data will be a factor, the markets will also need to consider any noise from Capitol Hill and Trump’s tour of Asia.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.