Aussie Dollar suffers as commodity prices drop – 8th December 2015
The commodity currencies, particularly the Australian Dollar which saw losses of 1.1% against Sterling and 1.4% against the US Dollar, were the ones to suffer on Monday. The Aussie also suffered this morning by news that imports by China, Australia’s biggest export customer, fell by -8.7% in November, marking a thirteenth month of decline.
The reason for the decline in commodity currencies was the fallout from Friday’s OPEC meeting in Vienna where members failed to come to any agreement on limiting supply. Oil has since matched the six-year low it touched in August and US$40 a barrel while the price of iron ore reached its lowest level in eight years. The US Dollar, the Euro and the Swiss Franc all picked up half a cent from Sterling as the safe-haven currencies benefited from the commodity fall out.
The Japanese Yen received a boost overnight from the second revision to third quarter growth in Japan which showed GDP to have expanded by 0.3%; more than the 0.0% predicted by analysts and even better than the slight shrinkage that some investors had feared.
There was not much else among Monday’s data to affect currency values. Nor did central bankers have any bearing on the proceedings. The Federal Reserve’s James Bullard was as hawkish as usual but doesn’t have a vote at the moment. Mark Carney spoke of housing bubbles and financial stability but not specifically about UK interest rates or the pound.
The important numbers this morning are for UK manufacturing and industrial production and third quarter growth in the Eurozone. Sterling gets another look after lunch when the NIESR reveals its estimate of UK growth in the three months to November.
Euroland GDP is reckoned to have expanded by 0.3% in Q3. The number would have to be markedly different to affect investors’ expectations for European Central Bank monetary policy. UK output is a different matter. Analysts say manufacturing and industrial production were both flat in October but their forecasts can often be wide of the mark