• Trade tensions cloud over Australia and New Zealand Dollars
  • Euro under pressure from fiscal policies and performance
  • Pound remains upbeat amidst polling

US awaits rate decision and data before Thanksgiving

The data diary for the US is light this week, in the run up to the Thanksgiving holiday, but some key announcements include Tuesday’s home construction figures and the Jobless Claims report due on Thursday. Housing starts showed a drop for September, which was hoped to be a temporary blip, so those keeping a close eye on the US markets will have been relieved to see a significant rebound this time around, with building permits up to the highest level since 2007.

The last Jobless Claims estimates to come through were disappointing, showing claims going up to the highest in five months, but there are unlikely to be any surprises in the actual figures, due to be released on Thursday. What could rock the boat for the US Dollar, however, is crude oil inventories, and the interest rate decision from the Federal Reserve Open Market Committee (FOMC). Markets are not anticipating any big surprises from the meeting minutes following Jerome Powell’s address to Congress last week, which touched on global economic risks but set the scene for a stable US economy. Coming up at the end of the week before activity starts to wind down for the holiday period are myriad manufacturing and sector purchasing managers’ indices (PMIs), consumer sentiment reports and commodity data.

 

Stock market prices and USD banknote

Last week was an interesting one for the USD, as it remained steady despite plenty of market-moving news, until weakening suddenly against most of its major currency pairings on Friday. This was largely due to speculation about the US-China trade tensions and whether a suitable trade deal can be reached between the two nations. An agreement seemed to ebb further away by the end of the week, leaving the USD languishing against all but the Australian Dollar, which held up with some help from Chinese economic data and its own boost from an improved economic outlook.

Trade tensions cloud over Australia and New Zealand Dollars

Speaking of the Australian Dollar, the Australian and New Zealand Dollars benefitted from some better economic news as China released additional liquidity into the market and the Japanese Yen strengthened on industrial figures. Some domestic data helped, too, with dairy prices up more than expected in New Zealand and the Australian economy looking healthier than it has been. Both currencies remain at risk of shocks from the US-China trade wars, however, so are under continued pressure.

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Euro under pressure from fiscal policies and performance

The Euro is also suffering from investors’ concerns about trade relations, in addition to admissions of potential risks associated with the European Central Bank’s (ECB) continued monetary stimulus policies. A mixed bag of data for the Eurozone is not helping matters, as the performance of key contributing economies such as Germany blow hot and cold. Next on the agenda for the Euro are the German Gross Domestic Product (GDP) results on Friday and a host of Eurozone industrial data, including preliminary manufacturing and services figures.

Pound remains upbeat amidst polling

Sterling, in contrast, is standing its ground in the run up to the UK’s general election on 12th December. Political pressures seem to be having more of an effect than economic data on the Pound, but markets seem to be happy that most of the UK news is focused on something other than Brexit for once. Of course, the underlying support for Sterling comes from the election potentially leading to some certainty about what will happen when the UK leaves the EU in the New Year, but c’est la vie…

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