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Aussie rallies on the back of Kiwi election result

By Brett Ottawa

The Australian Dollar saw a boost yesterday after the unemployment rate hit a four-year low of 5.5% and an increase in 19,800 Jobs for the month of September. Opening the day at 0.7840, we saw an immediate rally to 0.7870 with a slight drop off following the third quarter Chinese GDP figures, which slowed by 0.1% to 6.8%. The Australian dollar hit a 17th month high against the New Zealand Dollar following the decision of NZ First leader Winston Peters to form a coalition government with the NZ Labour Party. Markets saw a 2.2% rally to see the AUD/NZD hit a high of 1.1220 from its open yesterday of 1.0950. The Australian Dollar opens this morning at 78.75 US Cents.

The New Zealand Dollar is significantly lower when valued against the worlds reserve currency as news broke Winston Peters of the New Zealand First Party would enter into a coalition deal with Labour making Jacinda Arden the next New Zealand Prime Minister. The NZD/USD fell sharply off highs of 0.7171 and touched a four-month low of 0.7009. Investors fear that the Labour Party may have a potential impact on the economy and may also take measures to correct the Kiwi overvaluation. On the technical front, if we break 0.7000 the NZD/USD could potentially move towards 0.6930. Resistance now sitting at 0.7100 followed by 0.7155. Looking ahead, low tier data due out with NZ Visitor Arrivals and Credit Card Spending which is unlikely to move the Kiwi. 

Sterling continued its southward push through trade on Thursday edging lower following a softer than expected Retail Sales print. The dour consumption read comes on the back of a week long deluge of bleak macroeconomic indicators and further clouds expectations surrounding the Bank of England’s Monetary policy outlook. Retails sales fell eight tenths of a percent through September and catapulted quarterly inflation to its weakest rate in 4 years and cast further doubts on whether the BoE’s Monetary Policy Committee will extend its tightening platform beyond the one rate hike expected next month. Slipping below 1.3150 sterling touched intra-day lows at 1.3139 and opens marginally higher at 1.3155 as attentions turned to stalled Brexit talks for direction into the weekend.  

The US Dollar found support last night on the back of upbeat local macroeconomic data. All kicked off with better-than-expected Philadelphia Federal Manufacturing Survey which came in at 27.9 for October, beating market expectations. Weekly jobless claims were also up 222K for the week ended October 13th, better than the 240K forecasted by markets. While US equities fell overnight down 0.3 percent, its biggest drop in more than six weeks, led by Apple Inc which dropped as much as 2.4% on a report that orders for the recently-launched iPhone 8 have been almost halved for the rest of the year. Looking ahead today and all attentions turn to monthly US Existing Home Sales for September. The greenback is currently trading at 1.1844 against the Euro and 1.3151 against the British Pound.