EUR / USD, GBP / USD
The highest volatility on Thursday showed the British pound fell by 140 points and jumped to 160 points. Furthermore, the entire movements are connected with the statements of politicians. First, Michel Bernier, EU's chief Brexit negotiator, mentioned about another slowdown of negotiations which is expected to stand still. Later, Handelsblatt, the leading German language business newspaper, reported on the possible approval of a two-year transition period to Britain. However, the condition for such relief is the payment of EU compensation in full worth 60 billion euros, by which London has always been categorically opposed and sought to reduce the forfeit.
Euro avoided this yesterday "verbal attack" and could calmly decline by 30 points. The good indicator for industrial production declined, as the August growth was 1.4% against expectations of 0.6%. The US dollar was buoyed by the US inflation data for September, while the base producer price index rose by 0.4% against the expected 0.2%, and the total PPI exceeded the forecasted 0.4%. Meanwhile, the PPI rose from 2.4% to 2.6% in an annualized basis. Also, the Unemployment Insurance Weekly Claims Report showed 243 thousand appeals against the expected 251 thousand. Moreover, the positive roles of hurricanes in both cases of employment and inflation growth can be traced.
Today, the optimistic U.S economic data is expected to continue. Retail sales for September would likely show an increase of 1.7%, this is also one of the effect brought by hurricanes. Also, base sales, except for cars, are expected to increase by 0.9%. The consumer price index (CPI) for September is expected to grow by 0.6% (2.3% YoY vs. 1.9% YoY), and the base CPI may add 0.2% (1.8% YoY). The consumer confidence index from the University of Michigan for the same month is expected to remain unchanged at 95.1 points. The growth of inventories for August is expected to grow by 0.7%, which is the largest increase in the last two years, although it was considered as warehouse overstocking again due to hurricanes. Later, Charles Evans, Robert Kaplan, Jerome Powell will have their talks. Obviously, they will not speak against the December rate hike. Markets are expecting for 76.7% increase.
We are expecting the euro at 1.1775 level, then on 1.1720. We are expecting the British pound at 1.3095 region. In fact, the situation described by Handelsblatt already existed, but there are no changes yet.
AUD / USD
The Australian dollar did some corrective growth due to decline in the US dollar. As mentioned in the previous forecast, oil began to decline sharply to -1.51%, while coking coal decreased by 0.5%. While, the iron ore added 0.74% under the influence of the dollar in price and this reason is not yet the driving factor for the "Australian". Yesterday, investment growth in real estate showed an increase of 4.3% in August after contracting in the previous month by 3.9%. The growth of housing loans increased by 1.0% against the forecast of 0.5%.
Today, Chinese data on foreign trade came out positive. Exports increased from 5.5% YoY to 8.1% YoY. Imports increased by a large amount showing 18.7% YoY vs. 13.3% YoY, which led to a decrease in the trade balance from $ 41.99 billion to $ 28.47 billion. The structure of the trade balance is qualitative at the same time. On Monday, the Chinese CPI comes out with a September estimate, a forecast of 1.6% YoY vs. 1.8% YoY, which may hamper the development of optimism in the region.
The yield on Australian government bonds has slightly increased. If the trend continues, it is likely that the pressure on the national currency will also increase from this side.
As a result, we are expecting the "Australian" at 0.7740.
