Overnight NZD data surprised, with quarterly GDP missing targets, but revisions to past data show a strong annual figure, and exports increased 4%, the biggest rise for 20yrs. Alongside good private consumption data, there will be a decreased expectation of a rate-cut this year and into early ’17.
Australia also saw strong employment data, with a fall in unemployment rate from 5.7% to 5.6%, but other data such as lowered Inflation Expectations and a month-on-month fall in employment counter the optimism in the headline figure.
As part of our business, we are involved with many companies bringing new markets to developed markets. For example businesses that help, encourage and facilitate UK-€, India-€, EU-US business links. In particular, India has been in focus, and overnight the slump in the Rupiah should not be ignored – a TV story suggesting a currency devaluation is being proposed saw the Rupiah fall to 66.95. The Central Bank ‘manages’ the floating exchange rate and was forced to intervene – ‘watch this space’, especially as Rupiah has been one of the worst performing currencies this year.
The Bank of England meets today, and no change is expected in interest rates. Expectations are for a 9-0 vote for unchanged rates. Following August’s rate-cut and the package of measures designed to stimulate the economy, we have seen a raft of ‘surprisingly’ strong UK data. By not moving today, the Bank of England are allowing themselves the chance to ‘wait and see’ although many economists expect a cut in November, and a weak medium-term outlook for the UK economy and GBP.
UK Retail Sales beforehand will be closely watched and may add volatility to the morning session.
USA: Plenty to keep us on our toes – Retail Sales be the most important this afternoon, but jobless claims and some produce price figures may finally start to lead the Fed into a clearer policy decision .. the ‘will they’ / won’t they’ situation on interest rates will eventually tire the FX and bond markets. Tomorrow’s CPI (Inflation data) will help this policy decisions as well.
CHF: The Swiss National Bank announces rates very soon, and although expectations are for unchanged (EUR/CHF recent upward trend reinforcing this decision), the accompanying announcement will be closely watched.