Intraday Market Thoughts

GBP Swings on Polls, RBNZ Pause, Aussie Jobs Next

by Adam Button
Sep 11, 2014 0:23

Headline risk was the theme on Wednesday as news jarred a few currencies. The pound was the top performer on the day while the yen lagged. The RBNZ  left rates unchanged in early Asia-Pac trading but a busy day still awaits including Australian employment. Both of our Premium shorts in NZDCAD and NZDUSD are nearing their final targets following the RBNZ announcement. All details are in the Premium Insights.  

We've emphasized the importance of referendum polls and they swung the other way on Wednesday along with the pound. Two separate Scottish referendum polls showed pro-UK supporters with a 5-6 point lead and that quickly sent cable nearly 100 pips higher. The move crested just below the 1.6233 week-opening gap. That's a key level to watch if the bounce continues.

Two separate headlines from the SNB's Moser and Meier sent EUR/CHF as high as 1.2118 from 1.2075. They took a similar tone and said extra measures including negative rates remain options to defend the EUR/CHF floor and prevent deflation. There was really nothing new in the comments but with the SNB meeting coming on Sept 18, the market is growing weary.

The final headlines were from the RBNZ decision. Rates were left unchanged, as expected, but the kiwi tumbled to 0.8175 from 0.8230 when Wheeler said it's prudent to pause before considering more rate hikes. He also said the current level of NZD is unjustified and unsustainable.

The other notable move on Wednesday in what is suddenly a highly-volatile market was in USD/CAD. The pair crested above 1.10 twice in the past two days but promptly reversed down to 1.0933, market a potential false breakout.

The main event to watch in the day ahead is the Australian employment report at 0130 GMT. The consensus is for 15K new jobs with unemployment ticking down to 6.3%. A soft reading would confirm the breakout in the Australian dollar and could pave the way for a move much lower.

At the same time, China releases CPI data that's expected at 2.2% y/y. Comments about further stimulus yesterday hit at a low number, or at least one that matches estimates.

Act Exp Prev GMT
Consumer Prce Index (AUG) (m/m)
0.4% 0.1% Sep 11 1:30
Consumer Prce Index (AUG) (y/y)
2.2% 2.3% Sep 11 1:30
Employment Change s.a. (AUG)
-300 Sep 11 1:30
Fulltime employment (AUG)
14,500 Sep 11 1:30
Part-time employment (AUG)
-14,800 Sep 11 1:30
Unemployment Rate s.a. (AUG)
6.4% Sep 11 1:30

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