With big issues such as the U.S. government shutdown, Italy’s political drama, and the potential slowdown in the U.K. hogging the spotlight recently, the comdolls were forced to retreat backstage. What’s driving AUD, CAD, and NZD lately?
1. Shaky economic data
At one point, the Australian economy was boasting of strong consumer spending and inflation data, as the retail sales report and CPI both came in better than expected. However, the tides turned faster than you can say “G’day, mate!” as both building approvals and trade balance data printed disappointing results.
Data from China is also adding to the confusion, as the HSBC final manufacturing PMI suffered a downward revision just after the official manufacturing PMI printed an improvement. At the end of the day though, comdoll traders focused on the upbeat results and showed some love for the Aussie and Kiwi.
What’s a little surprising though is that the New Zealand dollar has been having trouble heading further north, even though data from the country has been strong. The ANZ business confidence report, building consents, and commodity prices have been nothing but good news, yet it seems that traders booked some profits off NZD/USD’s recent rallies.
As for the Loonie, the lack of surprises and major releases from Canada kept USD/CAD stuck in its recent range. The monthly GDP came in line with consensus of 0.6% growth while the Ivey PMI up for release this Friday could show an upside surprise.
2. Dollar appetite
It was easy for investors to shrug off weak data from commodity-related economies because they were more focused on the impact of a government shutdown on the Greenback. As I mentioned, it will not only weigh on economic growth, but also delay a possible taper by the Fed. Of course, it also didn’t hurt that the broad dollar weakness inspired a rally in commodities like gold.
3. Hawkish central bank statements
Interest rate expectations usually top the list of the most important topics in currency speculation, and this week is no exception.
We saw AUD/USD rise strongly early this week when the RBA not only left its interest rates unchanged, but RBA Governor Stevens also left out the words “scope for further easing” for the third month in a row. Traders took this as a sign that that it’s okay to drive the Aussie higher as the RBA is done with cutting rates…for time being.
RBNZ Governor Wheeler isn’t one to be left out as he caused a ruckus on NZD pairs early today. He said that the RBNZ is willing to raise its interest rates more aggressively if the mortgage lending limits imposed this month don’t slow down increases in house prices.
Right now the RBNZ is planning to raise its rates by 2% from 2014 to 2016 depending on the pace of house price inflation. Not surprisingly, NZD was boosted across the board at the news.
There you have it, folks! Hope you enjoyed this lil’ mid-week comdoll screenshot!