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December 2017

AUD stronger on data ahead of Gross Domestic Product release

Published: Tuesday 05 December 2017

  • 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.
 
Sterling slips
 
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. 
 
Present

“So, why are you looking so unhappy?” said Joe to his pal, Peter.

“I’m just not getting any sleep,” said Peter.

“Why’s that?” asked Joe.

“Maria has made me sleep on the sofa since her birthday.”

“Wow. You must have been bad. What the hell did you do to deserve that?”

“It’s just a bit of miscommunication. I asked her what she wanted for her birthday and she said she wanted something that would go from 0 to 100 in 3 seconds,” said Peter.

“You bought her a sports car and she’s still unhappy with you?” said Joe.

“Sadly not. I tell you Joe, my gift of bathroom scales didn’t go down well at all.”
 
And the winner of the Festive Film Quiz is Matthew Clark.

Congratulations and thank you for sending in all the correct answers.

A case of wine will be winging its way to you in time to celebrate the festive season!
 

5th December

Behind Today’s Advent Calendar Door…
It’s the Save the Children’s Ginger Christmas Jumper Cake Recipe!
In honour of Christmas Jumper Day on 15th December.
 

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR All Day Economic and Financial Affairs Council Meetings    
EUR 09:00 EU: Final Services Purchasing Managers' Index 56.2 56.2
GBP 09:30 UK: Services Purchasing Managers' Index 55.6 55.2
EUR 10:00 EU: Retail Sales 0.7% -0.6%
EUR 10:00 EU: Revised Gross Domestic Product 0.6% 0.6%
CAD 13:30 Canada: Trade Balance -3.2b -2.3b
USD 13:30 US: Trade Balance -43.5b -46.2b
USD 14:45 US: Final Services Purchasing Managers' Index 54.7 55.4
USD 15:00 US: ISM Non-Manufacturing Purchasing Managers' Index 60.1 59.2

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news