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It’s All Eyes on GBP, with a Slew of Stats and Brexit in Focus

Bob Mason
The RBA’s Statement of Monetary Policy did the Aussie Dollar no favors early on, with focus now on stats out of the UK and Brexit chatter.

Earlier in the Day:

Economic data released through the Asian session this morning was on the lighter side, with key stats limited to September home loan figures out of Australia and October inflation figures out of China.

Outside of the numbers, the RBA’s Statement on Monetary Policy was also released, following Tuesday’s interest rate decision, as the markets responded to the FED’s latest FOMC statement that signalled a green light for a December move.

For the Aussie Dollar,

New home loans fell by 1% in September, month-on-month, which was worse than a forecasted 0.9% decline, following a downwardly revised 2.2% slide in August, according to figures released by the ABS.

  • Owner occupied housing home loans fell by 1.2%, month-on-month, with investment housing loans falling by 0.9%.
  • Year-on-year, new home loans fell by 3.8%, with owner occupied housing loans slumped by 4.2%, while investment housing loans fell by 2.8%.

From the Statement on Monetary Policy, there were few surprises, with the RBA continuing to raise concerns over household income and risks to domestic consumption, while noting that economic growth and inflation had come in above estimates, with wage growth also seeing an uptick, though not enough to shift the RBA’s stance on policy.

Concerns over wage growth and consumption have continued to pin the RBA back from making a move on rates and, with the ongoing U.S – China trade war, there’s more downside risk to confidence and the economy, with a fall in the equity markets and house prices adding further downside to consumer sentiment.

The Aussie Dollar moved from $0.72650 to $0.72583 upon release of the minutes and the stats, before easing to $0.7246 at the time of writing, a loss of 0.14% for the session.

Out of China, consumer prices rose by 0.2% in October, month-on-month, in line with a forecasted 0.2%, whilst easing from Septembers 0.7%. The annual rate of inflation held steady at 2.5% in October, which was in line with forecasts, whilst the annual rate of wholesale inflation eased from 3.6% to 3.4%, also in line with forecasts.

Elsewhere, the Japanese Yen was up 0.15% to ¥113.9, with the Dollar giving up some of the FOMC driven gains, while the Kiwi Dollar saw red, with monetary policy divergence favouring the U.S Dollar, the Kiwi Dollar down 0.12% to $0.6746 at the time of writing.

The Day Ahead:

For the EUR, after a relatively busy week on the data front, there are material stats scheduled for release through the day, leaving the EUR in the hands of geo-political risk, the Italian coalition government’s face off with Brussels not the only issue the markets are facing, with infighting between the two sides of the coalition also a factor.

At the time of writing, the EUR was down 0.03% to $1.136, with noise from Italy the key driver for the EUR through the day.

For the Pound, it’s a particularly busy day on the data front, with key stats scheduled for release through the morning including 3rd quarter and monthly GDP figures, 3rd quarter business investment numbers, September trade data and industrial and manufacturing production numbers that are due out ahead of the NIESR’s UK GDP Estimate this afternoon.

While the stats are skewed in favour of the Pound, which should provide some support, it all continues to hinge on Brexit, with the UK government rapidly running out of time if a deal is to be had before the end of the year.

At the time of writing, the Pound was down 0.03% at $1.3058, with Brexit and today’s stats the key drivers through the day.

Across the Pond, stats out of the U.S are limited October wholesale inflation figures and prelim consumer sentiment figures for November, the 2-weeks of the prelim survey ending on 7th November unlikely to truly reflect consumer sentiment towards the mid-term election results ahead of the finalized numbers due out 21st November.

Outside of the numbers, we can expect chatter from Capitol Hill to have an influence on the Dollar, with the dust having yet settled from the mid-terms, the Republican’s loss of the House and the sacking of Attorney-General Jeff Sessions.

At the time of writing, the Dollar Spot Index was down 0.07% to 96.656, today’s stats and Capitol Hill in focus on the day.

For the Loonie, there are no material stats scheduled for release, leaving crude oil prices and market risk sentiment to provide direction through the day, the slide in crude oil prices weighing ahead of OPEC’s meeting this coming weekend.

The Loonie was down 0.01% to C$1.3156 against the U.S Dollar at the time of writing, with crude oil prices the key driver through the day.

This article was originally posted on FX Empire