Pound Weakens Ahead of UK Employment Report
AUD
Improving risk sentiment saw most global equity indices rise yesterday, with the Aussie Dollar also firming, opening higher against most major currencies this morning. The ASX slid -0.4% as materials were beaten down. Asian equities started the week mixed, the Nikkei +0.1%, Shenzhen +0.7%, and Hang Seng -1.5%. Commodities saw Iron Ore + 0.7%, Copper -1.6%, Gold +0.2% and Silver 0.3%. Last night we saw China’s New Loans tumble more than forecasted to a 3-month low in October, it came in at 500 billion Yuan after being forecasted at 770 billion Yuan. Policymakers seem to be effortlessly targeting the stuttering economy off the back of a prolonged property market downturn and swelling local government debt. A potentially quieter day in Australia with the monthly business conditions out of Westpac and NAB the only data points worth noting. Tomorrow, we have our quarterly Wage Price Index, forecasted at 0.9% quarter-on-quarter. On Thursday, our Unemployment Rate is forecasted at 4.1%, equal to previous readings. The employment data will draw attention over the coming days as Australia's tight labour market, and wage pressures, prevent the RBA from lowering interest rates.
USD
The AUDUSD pair opens at fairly flat at 0.6573 as both the AUD and USD strengthened over the past 24h. Wall St was open despite the US holiday with the Dow Jones +0.7% and S&P and Nasdaq holding modest gains. Out of the US, questions are beginning to grow around the idea that the Fed will follow with another rate cut in December. Economists have stated that the FED will watch the next inflation figures with great respect as it will heavily impact whether or not the FED continues to cut rates, the next being out on Thursday with CPI month on month forecasted at 0.2% in line with previous figures, and CPI year on year forecasted at 2.6%, up from last readings 2.4%. Aside from the CPI figures out on Thursday, we also have Purchasing Price Index data and Unemployment Claims out Friday and Retail Sales out over the weekend.
EUR
The AUDEUR opens at 0.6171, up almost 0.5% from yesterday, off the back of modest risk sentiment improvements for the AUD. European equities saw gains of +1.2% for both the DAX and CAC. There hasn’t been much data out of the Eurozone in the last couple of days. Although we have German Final CPI out this evening which is expected at 0.4% in line with previous outcomes. Also out is the German ZEW Economic Statement which should give us decent insight into what analyst’s rate Germany's economic outlook for the next 6 months. The main thing to look out for would be European Central Bank President Lagarde, who is due to speak later in the week.
GBP
The AUDGBP opens at 0.5096, up slightly from yesterday, with the Pound weakening ahead of this afternoon's UK employment report. Equities saw the FTSE up +0.7%. Today we have the UK's Claimant Count Change out with forecasts at 30.5K, up from the previous 27.9K. We also have the Unemployment Rate due at 4.1%, as well as the Average Earnings Index estimated at 3.9%. The UK labour market remains tight, although is continuing to gradually weaken. There will also be a second set of labour data before the Bank of England's next interest rate decision.
NZD
The AUDNZD opens flat at 1.1027 with little market-moving data released over the past 24 hours. Yesterday, we saw NZ Inflation Expectations print at 2.12% which was slightly greater than previous readings of 2.03%. The rest of the week shows not much data out, apart from the NZ Business Manufacturing Index on Friday, which previously showed contraction at 46.9.