- AUD stronger on data ahead of Gross Domestic Product release
- Sterling slips from last week’s highs – Brexit blah blah blah
- US Purchasing Managers’ Indices awaited
By David Johnson
Australian Dollar strengthens on strong economic data
Australian retail sales gained pace in October; rising at an annual 0.8% pace, compared to 1.5% in September. That is good news and the AUD strengthened. That strength was assisted by a less dovish statement from the Reserve Bank of Australia (RBA). The central bank left the Australian base rate on hold, but traders are downgrading their expectations of interest rate cuts from the RBA. The positive service sector Purchasing Managers Index (PMI) from China (Australia’s largest export market) also added weight to the Aussie Dollar strength and we saw GBPAUD fall from 1.77 to 1.7560 this morning after peaking at 1.79 last week. Overnight tonight we get Aussie economic growth data and that is forecast to be much stronger than the Q2 number of 1.8% annual growth. Something like 3.0 to 3.3% is forecast, so be ready for further AUD strength before the UK markets open tomorrow.
The Sterling – Euro rate is a cent lower than yesterday’s spike high after the inevitable backlash to anything the UK government tries to negotiate with the EU. The Irish Border issue, the cost of the exit bill, the starting of trade negotiations; you name it, there is an angry opposite view that gets plenty of media coverage and the Pound suffers. We are expecting slightly weaker UK Services PMI today, so the Pound is likely to give up more of its recent gains.
Eurozone awaits growth data
The Eurozone data for today comes in the form of Purchasing Managers Indices, as well as retail sales and the final calculation of Eurozone economic growth in Q3. It is unlikely we will see any change to the 0.6% previous estimate, but stranger things have happened. The trend appears to be set for a lower GBPEUR rate.
US Dollar making waves
The USD is making some waves as well. This afternoon’s Service Sector PMI may put paid to that though. The forecasts are not positive, but we should still see the number around 59 in an index where anything above 50 denotes growth and confidence. I doubt it will rock the USD too much, but it may slow its progress.
And hurrah for common sense! The Co-op is planning a 10p aisle where they will sell food that has passed its ‘best before’ date. Maybe people can re-learn the art of touch and sniff when buying food, rather than slavishly believing the twaddle we are served up on ‘sell by’ and ‘best before’ dates. It is said that honey can last thousands of years and yet there is a sell by date on all jars. Canned goods can last decades, but they too have a couple of years before their ‘best before’ date. We waste so much food that could be used; it’s criminal. I hope this initiative catches on.