Global overview
The Australian dollar – and currencies across the region – got a boost on Friday after the recent run of better Chinese data continued. However, a solid reading from US industrial production saw the US dollar index end the week at new highs. This week, decisions from the US Federal Reserve and Bank of England will be key.
Aussie ends lower despite strong China data
The Australian dollar was stronger on Friday after better-than-expected data from China but a US dollar comeback late in the session saw the Aussie end lower.
The Aussie had initially been boosted by stronger industrial production and retail sales numbers from China. Industrial production over the last year was reported at 4.5% (versus 3.9% expected) while retail sales were up 4.6% (versus 3.0%) over the same time.
The unemployment rate also improved falling from 5.3% to 5.2%.
The news saw China complete a second week of improving economic data after trade and inflation numbers were better in the previous week.
US economy delivers another “Goldilocks” result
Despite the initial flurry of buying, the Australian dollar weakened after better US data saw the USD stage a comeback.
The AUD/USD fell 0.1% after earlier striking two-week highs.
The NZ and Singapore dollars also ended weaker, although the Chinese yuan hung on to small gains.
The US dollar gained, with the US dollar index ending at new six-month highs, after industrial production and an improved rating from the Empire State manufacturing survey continued to illustrate that the US economy remains the clear outperformer versus its developed market peers.
Fed, BoE key this week
This week, the US Federal Reserve decision, due Thursday morning, is likely to be the highlight.
The ongoing strength in the US economy as inflation pressures ease has driven optimism for the so-called “Goldilocks” scenario in which inflation is not too hot but neither is growth too cold.
Away from the Fed, the Bank of England will also be key. The GBP has fallen sharply over the last two months as markets believe the BoE might be nearing an end to its rate-hiking cycle.
Any hint of a pause from the Old Lady of Threadneedle Street might drive the GBP lower this week.
Aussie reverses at two-week highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 18 – 22 September
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
