Aussie Dollar Weakens Amid Shrinking Trade Surplus

AUD

The Aussie Dollar opens largely down against the majors this morning in response to further strength in the US Dollar. Asian equities ended lower with the Nikkei -1.6%, Hang Seng -1.2% and Shenzhen -0.8%. Locally the ASX 200 traded higher by +0.3% as technology and healthcare sectors leading the pack at +1.7% and +1.6% respectively. Yesterday morning the Goods Trade Balance for Australia released which showed a decrease of $1,417m in November coming in at 2.94B, missing on the forecast of 5.14B. RBA deputy governor Andrew Hauser agreed with Bullock in a recent interview that the chances of a further interest rate cut in the near future are “very low” and that inflation remains above 3%, which Hauser acknowledges is “too high”. Looking to Asia, today China will be releasing CPI y/y and PPI y/y data around midday today forecasted at +0.8% and -2.0% respectively.

USD

AUDUSD opens down at 0.6697 following stronger than expected employment data out of the US. Unemployment Claims coming in at 208K (forecasted at 213K) combining with the the US trade deficit in goods and services dramatically improving to the least terrible trade deficit since 2009 contributed to the strength of the Greenback. Another mixed session on Wall St. overnight saw the Dow Jones trading +0.6%, the Nasdaq -0.5% and the S&P 500 unchanged on the day.  U.S. 10-year yields rose 2bps to 4.17%, while Brent Crude rose 2.7% to $61.60 a barrel. Tomorrow morning for economic data will have US Average Hourly Earnings m/m, Non-Farm Employment Change and Unemployment Rate continuing the end of the holiday drought for data.

EUR

AUDEUR opens down at 0.5744 continuing the correction trend for the Aussie. European equities were mixed with the DAX closing flat at 0.0% and the CAC closing slightly up at +0.1%. Yesterday saw some promising data out of the Eurozone with many results exceeding forecasts. German Factory Orders m/m was a standout which came in at 5.6% (forecasted at -0.9%) which is a leading indicator of production. Unemployment Rate dropped 0.1% to 6.3% and PPI m/m came in at 0.5%.

GBP

AUDGBP opens flat at 0.4986, trading sideways overnight. Looking to equities, the FTSE closed flat at 0.0% with not much movement happening out of London. A relatively quiet week for the Sterling, as all eyes move to next Thursday for the next major data release with the GDP m/m, Goods Trade Balance and Industrial Production m/m to be released.

NZD

AUDNZD opens flat at 1.1644 holding on to the 12 year high mark. Next week for the Kiwi we have ANZ Commodity Prices m/m on Wednesday and FPI m/m on Friday