The US dollar remains within recent ranges against the euro, yen and sterling. The antipodean currencies have been pushed lower, and that is where the movement is today. The main impetus is from a downgrade in the Reserve Bank of New Zealand’s inflation expectations, and momentum players selling the Aussie on the break of $0.8600. Players were encouraged by the help of a sharp 3% drop in iron ore prices and more jawboning by officials. The Australian dollar has recorded new four-year lows today. For its part, the New Zealand dollar has slipped through $0.7800. The multi-year low set earlier this month was near $0.7660. A retest seems likely next month.
The news stream is light, but between the EC review of the 2015 budget, Juncker’s “stimulus” plan (300 bln euros over three year, using a combination of leverage and repackaging previously earmarked bunds) and the vote on his censure, coupled with the OPEC meeting on Thursday (when US markets are closed), there are plenty of events on the near-term time horizon to inject more volatility. In addition, there is the Swiss gold referendum on November 30, and the France’s center-right UMP party’s leadership contest in which Sarkozy is expected to edge out Juppe. Whether this means that Sarkozy will be the UMP candidate for President is a different story and does not appear to be a foregone conclusion.
Four pieces of data emanated from Europe. First, Germany’s Q3 GDP was unrevised, showing 0.1% growth in the quarter after a 0.2% contraction in Q2. Second, France’s business surveys showed sequential improvement and a little more than the market expected. The French economy, recall, grew 0.3% in Q3, which was considerably stronger than the surveys, especially the PMIs, which are well below 50, suggested. Third, |Italian retail sales fell 0.1% in September. It is the fifth consecutive monthly decline. Outside of January, where retail sales were flat, there was only one other month this year that Italian retail sales did not fall (April +0.3%). Fourth, the BBA reported UK mortgage loans increased less than expected (37.0k vs 38.5k Bloomberg consensus and a revised 39.1k in September).
