AUD Consolidates a Week of Recovery

AUD

AUD held its own leading into the weekend, banking gains for the week after a terrible November. Asian equities were down by close on Friday, with both the Hang Seng and Nikkei losing out at around 1% a piece. The ASX dipped 0.4% based on poor performing health care and energy stocks, however the ASX finished the week 1.5% higher to buck the trend of 4 previous weeks of losses. Gold saw a modest gain of 0.4%, silver with stronger gains of 1.1%, and iron ore performing strength to strength with a gain of 2.1%. In upcoming data, Thursday will see RBA governor Lowe speak. As head of the central bank, he has more influence over the nation’s currency value than any other person. Thursday will also see local employment data which markets are expecting to show a reduction in the Unemployment Rate to 5.0%. Also worth noting, there is a triple-header of Central Bank meetings with the US Fed, The Bank of England and the ECB all set to release monetary policy decisions in less than a 24hour period starting Thursday morning.

USD

AUD held the week's gains leading into the weekend, opening slightly higher this morning at 0.7173. Friday saw mixed data out of the US, with Unemployment Claims showing a positively reduced number compared to forecast of 218k, coming in at 184k. Saturday morning saw solid inflation data from the US with Consumer Price Index month on month improving on forecasted 0.7% with actual at 0.8%, the Core measure showing a 0.5% increase which was bang on expectations. The result helped put investors at ease among concerns of accelerated tightening from the Federal Open Market Committee. Stocks enjoyed the result as the S&P 500 gained 1%, the Dow increased 0.6%, and the NASDAQ was up 0.7%. Oil was a moving marketplace with volatility continuing, leading to a gain of 1.4% to close the week out at $72 a barrel. The Fed's last meeting for 2021 takes place early Thursday morning, markets will be looking for a signal that there will be an early taper decision at February's meeting, although the failure of Friday nights CPI data to impress has dampened expectations of an early tapering.

EUR

AUD traded relatively tight ranges, having peaked at  0.6360 and opening almost exactly where Friday began at 0.6332. The European Central Bank president Christine Lagarde spoke on Friday without offering anything of note to market watchers. European equities traded in the red as traders awaited key inflation data out of the US. Looking ahead, and the ECB will have their last meeting of 2021 last on Thursday evening in what will be a busy 24hour period containing meetings also from the US Fed and the BoE. With Aussie Employment Data also due on Thursday morning, look for movement mid week.

GBP

AUD traded very similarly to AUD EUR, moving only slightly higher before retreating an opening this morning basically at Friday's opening level at 0.5401. In early data on Friday, UK GDP growth printed at 0.1% for October below expectations of 0.4%, the first month after the end of the furlough scheme. Markets continued to re-evaluate expectations of a rate hike at the Bank of England’s upcoming policy meeting on Thursday night, from 36% a fortnight ago to just 19%. GBP/USD fell to 1.3188, edging closer to 12-month lows, following the weak GDP data. Also in the UK, Industrial Production month on month for October was -0.6%, lower than expectations of 0.1%, year on year was 1.4% (2.2% expected). Manufacturing Production month on month in October printed at 0% in the UK, below expectations of 0.2%, year on year was 1.3% (1.6% expected). In upcoming data, Wednesday will see Consumer Price Index data come out of the UK and the main event will take place on Thursday evening with the BoE decision.

NZD

In relatively quiet trade, the AUD capped off a strong week against NZD consolidating 2 cents worth of gains and  opening slightly higher at 1.0538 this morning. Not much in the way of data has come to pass over the weekend for the Kiwi, however in upcoming data on Wednesday, RBNZ Governor Adrian Orr will speak. and on Thursday quarterly GDP data will be released with markets expecting a considerably poor result of a 4.5% contraction, down from last quarter's previous growth of 2.8%.