World First Weekly Update

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AUD

The RBA was intent on shocking the markets last week with a surprise rate decision accompanied by less hawkish than usual commentary. On reflection, the inflation figures didn’t provide sufficient reason for an RBA movement on rates however this was not market consensus and the local currency weakened heavily as a result. Globally, there were continued jitters in Europe and slightly weaker than expected employment figures from the US in what was a busy week for economists.

 To kick-start proceedings, the House Price Index (13.6%) was better than expected and supported a rate rise the following day. The Sydney Futures Exchange had the probability of a 25 basis point rate increase at 74%, however Interest Rates (3.75%) were kept on hold and the AUD weakened heavily. Importantly, in December, deputy governor Ric Battellino stated that interest rates were “now back in the normal range” assisted by Retail Banks passing on higher rate increases than the central bank. Also on Tuesday, the NAB’s Business Confidence, 4Q (8) figure was significantly lower than the previous quarter

The other key figure from Australia was released on Thursday and supported the brakes being put on rate hikes with the Retail Sales Trend (-0.7%) figure for December being worse than expected.

Globally, ISM figures for the US for manufacturing (58.4) and Non-Manufacturing (50.5) both showed improvements from the previous month. From Tuesday however, the local currency was largely muted leading into the Non-farm Payroll (-20K) figure on Friday night. This figure provided little direction for equity markets or risk appetite and the AUD held steady as a result. 

The week ahead in Australia:

Tuesday 9th – NAB Business Conditions, Westpac Consumer Confidence

Wednesday 10th – Home Loans.

Thursday 11th – Consumer Inflation Expectation, Employment Change, Unemployment Rate.


AUDEUR

The pairing was consistently down last week, opening at 0.6342 and closing the week at 0.6316.

 

The week ahead in the Eurozone:

Monday 8th – Sentix Investor Confidence, ECB Trichet/s Speech.

Tuesday 9th – Consumer Price Index (Germany), Trade Balance (Germany).

Thursday 11th – ECB Monthly Report.

Friday 12th – GDP (Germany), GDP, Industrial Production.

 

AUDGBP

The pairing was one of the hardest hit from the interest rate decision, however it recovered slightly in Friday’s overnight trade. The pairing opened at 0.5514 and closed at 0.5507, reaching a high before the rate decision of 0.5589.

 

The week ahead in the UK:

Tuesday 9th – BRC Retail Sales monitor, RICS House Price Balance, DCLG House Price Index, Goods Trade Balance, Total Trade Balance.

Wednesday 10th – NIESR GDP Estimate, Industrial Production, Manufacturing Production, BoE Quarterly Inflation Report, BoE’s Governor King Speech.

Friday 12th – Leading Index.

AUDUSD

The pairing continued to track downwards last week, opening at 0.8797 before reaching 0.8910 before the rate decision only to close at 0.8663.

 

The week ahead in the US:

Tuesday 9th – Wholesale Inventories.

Wednesday 10th – Trade Balance, EIA Oil Stocks change.

Thursday 11th – Retail Sales, Business Inventories.

Friday 12th – Reuters/Michigan Consumer Sentiment.

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