Early Xmas Rally Helps AUD see Green
AUD
The Australian Dollar rallied as risk related assets moved higher overnight, the Aussie being well supported against all majors currencies barring the Yen. Asian equities were mixed on Wednesday with the Nikkei down -0.7% while the Hang Seng rose +0.2%. The ASX closed the session +1.3% higher with gold miners and gas producers outperforming. Yesterday’s Melbourne Institute Leading Index for November came in at -0.1%, but had a muted impact because most of the indicators used in the calculation are released previously. An underwhelming day on the macroeconomic calendar with no data releases penciled in for today, tomorrow’s Mid-Year Economic and Fiscal Outlook will be one of the final pieces of data for the year.
USD
The AUD/USD recaptured the 0.67 handle but could not extend gains much further, continuing to trade at 0.6708. Wall Street rebounded from recent losses with solid gains, Nasdaq up +1.8%, Dow Jones and S&P 500 both up 1.7%. The headline piece of data from last night was the Conference Board’s US Consumer Confidence Index, which showed that consumer confidence rose by more than forecast to the highest since April as inflation eased and gasoline prices dropped. The index increased to 108.3 this month from an upwardly revised 101.4 reading in November. Later in the US session, Existing Home Sales for November fell by 7.7% to 4.09 mio to come in worse than expectations of a 5.2% decline to 4.20 mio, though it was largely ignored by markets. Tonight’s Final GDP q/q and Unemployment Claims will be keenly watched to see if the Fed’s ‘soft landing’ approach is on track.
EUR
The AUD/EUR also reclaimed a significant price level after a short stint in the 0.62s, jumping back up to 0.6321 currently. European markets edged higher in late trade with the CAC closing up +2.0% while the DAX gained more than +1.5% on the day. GFK Consumer Sentiment rose for the third time in a row as economic and income expectations and propensity to buy have recorded gains. With an increase of 10.9 points, the indicator climbs to -43.4 points. Despite the slight improvement, consumer sentiment remains low. Consequently, the lack of consumer spending will continue to weigh on the economic development in Germany next year. No data out of Europe until the Bundesbank in Germany releases the Monthly report (tentative).
GBP
The AUD/GBP picked up over 1% last night, trading at a high of 0.5549 before settling to 0.5540. British Retailers reported an unexpected rebound in sales volumes growth in the year to December, according to the CBI’s latest monthly Distributive Trades Survey, growing +11% from -19% in November, better than expectations of a decline of -21%. The Sterling dropped after the Brits posted Public Sector Borrowing data, which showed that the public sector spent more than it received in taxes and other income, requiring it to borrow £22.0 billion, which was £13.9 billion more than in November 2021, and the highest November borrowing since monthly records began in 1993. Another handful of British data set for release tonight with Current Account, Final GDP, Revised Business Investment, and the BoE Quarterly Bulletin all penned in for this evening.
NZD
The AUD/NZD continued yesterday morning’s strong northbound run, rising from 1.0541 to 1.0653 currently. Yesterday’s Credit Card Spending from NZ rose by +16.0% from the previous year, which usually correlates with rising consumer confidence as a sign that lenders feel comfortable issuing loans, and that consumers are confident in their financial position and eager to spend money. No more data from the New Zealand for the remainder of the week.