Australia Dollar weakens in Asian session after release of GDP data showed -0.5% qoq contraction in the September quarter. That's much worse than expectation of 0.2% qoq growth and even worse that the most pessimistic expectation of -0.1% qoq fall. Meanwhile, that's also the largest decline since 2008. And, that's the only fourth quarterly contraction since mid 1991. On annual basis, GDP growth slowed to 1.8% yoy, worst reading since 2009. Also, in per capita terms, real GDP dropped by an even larger -0.8% qoq. RBA has noted in yesterday's statement that "some slowing in the year-ended growth rate is likely, before it picks up again." While one quarter's figure wouldn't prompt RBA to chance it's stance, the deep contraction would provide some food of thoughts for governor Phillip Lowe. And, Q4's data would gain more importance ahead.
Dollar is regaining some strength against most major currencies and is trading down versus Euro and Swiss Franc for the week only. DJIA closed at another record high at 19251.78 overnight, up 35.54 pts, or 0.18%. S&P 500 also ended up 7.52 pts, or 0.34%, at 2212.23, just shy of record close at 2213.35. US yields are staying in consolidation in range with 10 year yield closing at 2.396, 30 year yield at 3.082. That provides some support to the greenback as the dollar index is back at 100.5 after breaching 100 handle briefly. The greenback would likely stay in consolidative mode ahead of FOMC meeting next week, where Fed is expected to hike interest rate by 0.25%.
BoC rate decision will be a major focus today. The central bank is expected to keep interest rate unchanged at 0.50%. There is little prospect for further easing by the central bank considering that the economy hasn't performed worse than expected. Meanwhile, recent surge in oil prices after OPEC's agreement on production cut should pain a better outlook for trade. And, US president-elect Donald Trump's expansive fiscal policy could also benefit Canada. Nonetheless, while Fed is now in a stage of policy accommodation removal, the Canadian economy is still struggling to gain pace. Overall, markets are expecting BoC to stand pat throughout 2017.
Elsewhere, UK BRC shop price index dropped -1.8% yoy in November. UK will release industrial and manufacturing production in European session. Germany will release industrial production while Swiss will release foreign currency reserves.