Aussie dollar falls to four year lows as commodities continue to slide

United States Dollar:

The Bank of England Governor Mark Carney and other MPC members testified before the Treasury Select Committee yesterday. They didn’t say anything too surprising – Carney said that the next policy move would be to raise interest rates, although didn’t say when. He also referred to uncertainty about the extent of slack in the economy and that the UK still faced threats from the eurozone. Referring to inflation, MPC member Kristin Forbes said that “currently measures of domestically generated inflation are also low and that should continue to keep inflation contained for now”. If anything, the tone of the hearings was dovish but it didn’t have much of a negative impact on the pound. Later on Tuesday, US prelim GDP q/q printed quite a lot stronger than expectations, showing that the US economy expanded by 3.9% in the third quarter. GBP/USD dipped to a low of 1.5656 on the news, but again the impact was fairly muted. In contrast, US consumer confidence data and Richmond manufacturing numbers were weak and worse than forecasted. The dollar immediately weakened on the news and GBP/USD rallied to 1.5728. It held firm throughout the overnight session and opens this morning at 1.5715. UK second estimate GDP, US durable goods orders and US new home sales are the key releases to look out for today.

Euro:

EUR/USD also responded positively to the weak numbers from the US yesterday, rallying from 1.2400 to a high of 1.2486. It has gone on to trade even higher today and touched on 1.2494, in line with stronger equity prices in Europe this morning. Like yesterday, there isn’t much by way of European economic data due but the pair is likely to be responsive to a plethora of US releases this afternoon. Meanwhile, the euro has made good ground against GBP over the last 24 hours and GBP/EUR trades at 1.2590 currently.

Aussie and Kiwi Dollars:

The aussie dollar has continued to fall over the last day. Weaker than expected Australian construction data released overnight didn’t do the currency any favours and doesn’t bode well for GDP. AUD/USD has broken down through stops under .8520 this morning – it opens at .8500 and is threatening to slip below this level. NZD/USD has been steady by comparison, pushing higher over the last 24 hours. It opens in London at .7825.

Data releases for the next 24 hours:

AUD: Private Capital Expenditure q/q

EUR: No data

GBP: Second Estimate GDP q/q, Prelim Business Investment q/q, Index of Services 3m/3m, CBI Realized Sales

NZD: Trade Balance

USD: Core Durable Goods Orders m/m, Unemployment Claims, Core PCE Price Index m/m, Personal Spending m/m, Personal Income m/m, Chicago PMI, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, New Home Sales, Pending Home Sales m/m