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Aussie Lower as Risk Off Tone Returns

Published November 15, 2019

Author Steven Oram

The Aussie Dollar opens lower this morning as commodity currencies took a hit as a risk-off tone returned to markets.  The change in market sentiment was driven by a flow of mainly negative news including US – China trade talks, the ongoing situation in Hong Kong, and weak data releases out of China, Japan, and Australia yesterday.  Both the NZD and AUD are weaker and down on most major cross rates.

Australian Unemployment Rises

Unemployment for October rose to 5.3% from 5.2% in September as the economy lost 19,000 jobs.  Markets were expecting jobs to increase by 15,000 with the unemployment rate to stay steady at 5.2%.  The Australian Dollar fell on the negative numbers with analysts suggesting that the RBA will be forced to cut rates again in February if unemployment continues to rise.  Also weighing on the Aussie was worse than expected data out of China, with retail sales growing at 7.2% vs market expectations of 7.8%.

Inflation continues to remain muted in the United States as the latest producer prices reading only showed a 1.1% rise year on year – the lowest since October 2016.  However, PPI did rise 0.4% m/m in October, which beat market expectations and reversed a the 0.3% decline in September.

UK retail sales came disappointing once again after posting a 0.1% decline in October – its second decline in 3 months.  This is just the latest in a parade of troubling economic data coming out of the UK, and the pressure may start to mount on the Bank of England if the trend continues.

Eurozone growth continues to be battered by its struggling manufacturing industry.  Eurozone Q3 growth came in at just 0.2%, and at the moment there are few signs of things turning around so far in Q4.

Not much on the local front today, with NZ manufacturing PMI out later this morning.  Major data out of the US tonight with retail sales expected to have increased by 0.2% in October.