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Aussie Extends Decline On Weak Stocks, Consumer Confidence Drops

Published 09/10/2014, 02:22 AM
Updated 03/09/2019, 08:30 AM

The Aussie extends its slump against dollar today on expectation that Fed is going to hike rates next year. Additional pressure was seen in the Aussie as Westpac consumer confidence dropped steeply by -4.6% in September. While dollar remains generally firm, buying in the greenback has shifted away from the stabilizing European majors to commodity currencies. Among the commodity currencies of Aussie, Kiwi and Loonie, Aussie is so far hardest hit this week. Part of the reasons is the general weakness in Asian equities outside of Japan, following the pull back in US stocks overnight. Major Asian indices are in red at the time of writing, with HK HSI down -1.8%, Shanghai Composite down -0.8% and Singapore Straits Time down -0.2%. Nikkei also opened lower but reversed earlier loss in Japan afternoon.

In UK, BoE governor Carney said yesterday that economy recovery in UK has "exceeded all expectations" with "momentum". And he affirmed that expectation that normalization of interest rates is near. And, rates could begin to rise "by the spring" and thereafter rise "very gradually". And as a result, inflation would settle at around 2% by the end of BoE's forecast horizon with additional 1.2m jobs added to the economy. Sterling turned sideway against dollar after selloff reached climax yesterday. But the pound would stay under pressure with all the uncertainties over the referendum on Scottish independence.

Elsewhere, Japan machine orders rose 3.5% mom in July versus expectation of 4.0% mom. The economic calendar is rather light today. Canadian capacity utilization rate will be release in US session while US will release wholesale inventories.

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