Producer Price Rebound Extends USD Gains

AUD

The Aussie Dollar sees a further decline to finish the week, opening the day lower against the majors, with commodities seeing a similar result, with metals (Gold, Silver, Iron Ore, Copper) all dropping, while Crude Oil gaining 0.3% and Natural Gas steamed ahead, up 5.3%. Asian equities were mixed into the close, with the ASX closing up 0.4% and the SHANGHAI COMP closing down 1.7%. RBA Gov Bullock was speaking yesterday, mentioning that the RBA is not as restrictive as other central banks, but it is still sufficiently so. Employment data was released locally as well, with the Employment Change coming in lower at 15.9k, lower than the expected 25.2k and well below the previous 61.3k and the Unemployment Rate remain unchanged as expected at 4.1%. Australia’s next rate cut bets have been pushed into the start of next year due to the resilient jobs sector, but with slowing employment growth it may be showing the job market is starting to weaken. Looking forward at 1pm today we have some Chinese data set to be released, with the Industrial Production y/y set to rise to 5.5% and Retail Sales rising to 3.8%. China needs a strong result in industrial production if it is to fight to potential tariffs that may further-shackle their economy.
 

USD

The AUDUSD continued to slide lower yesterday, with the pair dipping through the 0.6450 barrier, hitting new 3-month lows as wholesale inflation picked up (again), with USD strength reaching fresh 1-year highs. The pair open this morning at 0.6450. Wall Street finished in the red, with the DOW JONES and S&P500 both down 0.4% and the NASDAQ closing down 0.5%. US wholesale inflation picked up more than expected in October, with Core PPI m/m and PPI m/m was released overnight, with both figures hitting expectations of 0.3% and 0.2% respectively. This shows wholesale inflation picked up in October, indicating that some price pressures persist at the producer level. Unemployment claims came in softer than expected, down 4k from 221k last month, with expectations of a 3k gain. Crude Oil Inventories kept steady at 2.1m overnight, with forecasts that it would drop to 0.4m. Fed Chair Powell spoke last night, keeping his rhetoric steady, mentioning that they will be careful about changing policy until they have a lot more certainty. Tonight, we will see Retail Sales figures being released, with both the Retail Sales m/m and Core are expected to drop to 0.3%, from 0.4% and 0.5% respectively.
 

EUR

The AUDEUR sees a light drift lower in the past 24 hours, keeping in a fairly tight range yesterday, opening this morning at 0.6127. European equities managed to make strong gains into the close, with the DAX up 1.4% and the CAC up 1.3%. Last night saw Flash GDP q/q come in unchanged at 0.4% as expected, while their Industrial Production m/m took a hit, coming in 0.7% lower than expected at -2%, previously 1.5%. Earlier this morning saw ECB President Lagarde speaking at an awards ceremony, not impacting markets. It is a quiet finish to the week for the Europeans, with French Final CPI m/m being released, expected to remain at 0.2%.
 

GBP

The AUDGBP opens the day lower, with the pair having a small rally yesterday morning, before an overnight retrace to open this morning at 0.5081. British equities saw small gains, with the FTSE closing up 0.5%. Yesterday was quiet in the news, with earlier this morning seeing BOE Gov Bailey Speaking at a dinner, giving a speech on the overall British economy, not giving any indication to future interest rate movements, leaving markets unchanged. Tonight, will see the GDP m/m and Prelim being released, both expected at 0.2% month-on-month. The British economy has been struggling to piece together consecutive months of growth, so a positive showing here will give hope to a recovery for the bruised UK’s economy.
 

NZD

The AUDNZD opens the day flat, with the pair keeping in a tight range all of yesterday, opening this morning at 1.1030. Earlier this morning saw the BusinessNZ Manufacturing Index released at 45.8, lower than the previous 47. There is no further data for the Kiwi’s this week.