Thursday was very active, with the Aud$ the centre of attraction, and after heading higher following the strong jobs data it has since fallen heavily when Westpac forecast two RBA cuts this year. It then suffered a further selloff on the news that China’s Dalian port has banned imports of Australian coal. The Aud$ closed on its lows and looks very heavy heading into Friday trade. Elsewhere the currency markets were more stable, although the Aud$ dragged the Kiwi along with it, while Cable was firm on hope there will be an updated Brexit deal to vote on next week. The Euro was choppy following a mixed reading from the EU PMIs. For its part, the US$ was mixed following the release of the US data, which was generally on the soft side.
The headline durable goods orders rose 1.2% in December, below expectation of 1.8%, while the ex-transport orders rose 0.1%, also below expectation of 0.3%. The Philadelphia Fed Business Outlook dropped to -4.1 in February, down from 17 and missed expectation of 14.8, the lowest level since 2016. The Initial jobless claims dropped -23k to 216k.
In other markets, the metals took a hit, with Gold trading -0.85% and Silver -2.3%, while oil is trading down by -0.45%. Stocks are also lower, by around 0.5%.
Friday will begin with the RBA Governor giving his semi-annual testimony to the parliamentary Committee, which could increase the action in the already volatile Aud$. Asia will also see the January China House Price Index and the Japan National CPI. Later in the day we get the German Q4 GDP (exp 0.0%qq, 0.6%yy), the German IFO Business Climate (exp 99.0)/Expectations (exp 94.2) and the EU CPI (CPI, exp 0.5%mm, 1.4%yy; Core, exp 1.4%yy). Finally, Mario Draghi will be speaking and will be followed by plenty of Fed speakers, who will undoubtedly confuse the issue: Bullard, Quarles, Clarida, Williams. Have a good weekend.
Economic data highlights will include:
Fri: RBA Governor Lowe Speech, Japan CPI, China House Price Index, German GDP, German IFO Business Climate/Expectations, EU CPI, CBI Distributive Trade Survey – Realised
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