AUD and NZD weaker on Asian news
In a very busy overnight session, the Bank of Japan left the base interest rate on hold at minus 0.1%. That was a little surprising as many in the markets had started to believe the time was right for the BOJ to get their base rate at least into the positive zone. The other data was a series of broadly negative purchasing managers indices from China. The manufacturing sector fell into negative territory and both the non-manufacturing (service sector) and the Composite Index fell below the market expectations. That rather negative batch of news was enough to see the Australian dollar give up some of the gains it has made over the last few days. The GBP/AUD rate is up to AUD 1.9120 this morning and the GBP/NZD rate is a tad higher at NZD 2.08. There is nothing new from Australia for the rest of the day but we will see the Reserve Bank of New Zealand issue a financial stability report tonight and that will be followed by a speech by the governor of the RBNZ. In the early hours of tomorrow Australian building approvals data will be released and so will the Caixin manufacturing PMI. So it should be another volatile night.
Mixed German and French data ahead of eurozone inflation & GDP
German retail sales contracted by 0.8% in the month of September, French inflation pipped up to 0.2% but French GDP slipped to just 0.7% in the year to September. So the European Central Bank has a lot to consider as we await this morning’s release of eurozone consumer price inflation and economic growth data. The expectation is that on an annualised basis eurozone economy will have grown by 0.2% in the year to September with virtually zero growth in Q3. Add in the expectation that call inflation we have slipped to 4.2% and we are starting to get into the territory of interest rates being held on hold in the eurozone or maybe even reduced marginally. The next interest rate-setting meeting for the ECB is not until the 14th of December but there will be plenty of speculation and discussion in the meantime. Right now the GBP/EUR rate is slightly lower at €1.1440 and the EUR/USD rate is Bing flattered by a modicum of US Dollar weakness. This pet is up to $1.0632.