The FOMC statement on Wednesday has proved advantageous for high risk currencies, particularly the AUD/USD and NZD/USD. Both currencies have seen an advantageous rise since Wednesday, with the Aussie gaining over 1.3% to be currently buying 94.36 US Cents.
Noticeable frustration from the RBA has been displayed this week with the ASX alone gaining AUD$14billion from FOMC rhetoric. The case for utilising macro prudential tools on bank lending/capital ratios will most certainly be pushed onto the Stevens & Co, as the mainstream media’s fixation on the idea intensifies.
The move would almost certainly cool off the pressure on the housing market, while also allowing Australia to remain competitive for international investment. However, until the real exchange rate (Wages + Exchange Rate) can improve, Australia will remain in the current uncompetitive trading band – with the results widening the gap within the two speed economy.
Overnight, the Swiss National Bank Rate was left on hold as expected, with key inflation figures remaining on target showing that the land bound nation’s economy is chugging on. The decision saw the US Dollar lose ground to the Swissie, buying a session low of 90.89 Swiss Francs.
British retail sales for August were 1.2% lower coming in at 2.1% for the year, which saw Cable gradually lose over 115 pips, for a session low of 1.603 US Dollars. The news causes concern as Public Finances for August area released tonight. The figure looms as an important signs for the British economy and its government’s fiscal policy, while UK pundits look for signs of a recovering economy.
Overnight in the US we saw the FOMC hangover slowly falter with US Existing Home Sales, the Leading Indicator and Philly Fed Index coming in higher than expected.
Eurozone consumer confidence for August is expected to lay flat overnight with limited Euro movement.
Over the Atlantic the commodity bloc is highlighted with Canadian Core CPI expected to show signs of deflation for August, a negative sign for an economy with a significant housing bubble. The Hawks outweigh the doves overnight with three FOMC committee members, Georg, Bullard & Kockerlakota, likely to give some insight into their current thoughts on monetary policy in New York.