Chinese GDP Growth adds support to AUD

Australian Dollar:

The Australian Dollar enjoyed a brief break above 0.88 yesterday touching an intraday high of 0.8825 on the back of stronger than expected Chinese GDP Growth and Industrial Production. Reports showed China’s economy expanded 7.3% in the third quarter while industrial production jumped 0.5% on numbers reported this time last year surpassing economists’ expectations and buoying market confidence in the world’s second largest economy. The Aussie dollar found further support in rebounding copper prices as the commodity surged to 5 week highs in London overnight. The Reserve Bank minutes offered little suggestions of change in the current monetary policy stance with an accommodative dogma expected to continue. Having meet resistance at levels above 0.88 the AUD opens this morning buying 0.8780 US cents and attentions turn to third quarter inflation data for further direction through trade on Wednesday.  

• We expect a range today between 0.8700 – 0.8875

New Zealand Dollar:

The New Zealand Dollar momentarily broke through resistance at 0.80 yesterday as stronger than expected Chinese GDP Growth helped bolster confidence and support high yielding assets. The Kiwi touched intraday highs of 0.8015 before breaking lower to open this morning at 0.7958. Better than anticipated existing US home sales helped subdue any significant Greenback selloff as markets seems range bound and relatively quiet, reluctant to make any major moves ahead of today’s US CPI inflation report and European manufacturing data Thursday.

• We expect a range today of 0.7850 – 0.8050

Great British Pound:

Cable gains consolidated yesterday as stronger than expected existing home sales in the US helped bolster the Bloomberg Dollar Spot Index and added support to the Greenback across the board. With little domestic data available Sterling was at the mercy of offshore indicators and having rallied strongly on the back of attuned US interest rate bets markets looked to square positions ahead of today’s MPC vote count and minutes from their October meeting.

• We expect a range today between 1.8275 – 1.8500

Majors:

The U.S. Dollar fell against the Yen through trade on Tuesday as futures traders adjusted bets the Fed will raise rates before October 2015. Expectations of a rate hike have fallen to 46% a remarkable reversal given 51% of analyst predicted an October rate hike at the end of last week. Stronger than expected existing home sales helped fuel Greenback support as the National Association of Relators reported a 2.4% increase for the month of September. In other news the Euro is poised for a further downward correction as reports emerge the ECB is looking to add corporate bond purchases to its easing and stimulus measures as early as December. The Central Bank has this week begun its purchase of short dated government securities purchasing Italian, French and Spanish notes in a bid to boost bank lending and stave off deflation. The Euro has fallen against the majority of its 16 major currency counterparts and with global growth prospects driving direction investors will be keenly focused on manufacturing numbers Thursday. Today attentions turns to US inflation data for further directional impetus.  

Data releases

• AUD: CPI and Trimmed Mean CPI, CB Leading Index and MI Leading Index
• NZD: No Data
• JPY: Trade Balance
• GBP: MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, MPC Member Weale Speaks.
• EUR: German 30 year Bond Auction
• USD: CPI, Core CPI and Crude Oil Inventories