FOREX Comments for Today 17 Nov 2015
USD has further strengthened in the latest trades on Monday, partly in response to the Paris terrorist attacks. USD/JPY and USD/CHF are notably higher as global equity markets recovered.
The strength in the USD was not necessarily related to U.S. economic data, with the US November Empire manufacturing survey declining for the fourth consecutive month. US October CPI inflation data industrial production data is released later today, with a particular focus on the inflation numbers.
EUR/USD moved to a one-week low in overnight trade as the USD strengthened. The ECB also announced 9 banks had a capital shortfall totalling a combined €1.87 billion in the results of its recent stress-test. However, many of the banks have since raised the necessary capital. A Portuguese bank fared the worst.
EUR/USD gained little-support from Eurozone economic data that showed the final measure of Eurozone annual October headline and core inflation both rose 0.1% more than expected to 0.1% and 1.1% respectively reflecting back-end revisions to the data.e German November ZEW survey is released today and it may create some volatility in the EUR pairs.
AUD/USD edged lower on Monday trade in response to a firmer USD and further weakness in base metal commodity prices. This morning, the minutes of the RBA’s 3 November board meeting, where speculation was higher than usual that the RBA may lower interest rates, are released (11.30am Sydney time). The RBA minutes will provide some colour on the thinking of the RBA board. The minutes may detail how much discussion (if any) was given to the consideration of a rate cut. The risk is the minutes appear somewhat dovish, and AUD/USD eases somewhat. Also today RBA Assistant Governor, Chris Kent is speaking at a Sydney conference (8.30am). Chris won’t deviate from the RBA party line.
AUD/GBP remained in a tight range overnight. Later today U.K. October CPI is due and risks undershooting market expectations because of an-unwind of past tuition fee hikes; pushing UK inflation into mildly shallow negative territory. UK retail sales (due Thursday) look set to fall back relatively sharply as the Rugby World Cup-induced surge is unwound. A run of softer UK data, particularly the UK CPI, will dampen market expectations for the timing for the first BoE rate hike. This will weigh on two-year UK swap rates and GBP, but will not generate a trend change in AUD/GBP.
NZD/USD under-performed on Monday trade, with AUD/NZD lifting. The milk futures point to a fall in today’s fortnightly global dairy auctions. Dairy prices have begun to decline again after a recent bounce, and we believe further weakness in dairy prices is in store. Last week, the US Department of Agriculture released its monthly World estimates, with lower US milk production and prices forecast for 2015 and 2016