Australian Dollar Broadly Lower on Weak GDP Data

Market Reviews

The US dollar strengthens today. Canadian dollar and euro are trading as the strongest ones. The British pound is weak, as Prime Minister Theresa May’s debate of her Brexit deal in the parliament didn’t go too well. The Australian dollar is trading as the weakest one after GDP data.

US 10 year yield dropped sharply by -0.68 to 2.924 and closed below 3% level for the first time since September. 30-year yield dropped even deeper by -0.100 to 3.178. German 10-year bund yield closed at 0.264 yesterday (the lowest level since May). Japan 10-year JGB yield dropped to 0.053 earlier today, and hit the lowest level since July.

On stock markets, DOW lost 3.10% overnight to close at 25027.07. S&P 500 fell 3.24% while NASDAQ declined 3.80%. In Asia, Nikkei fell 0.67% to 21887. Singapore Strait Times lost 1.0%. Hong Kong HSI declined 1.84% while China Shanghai SSE dropped 0.68%.

Official representatives of the China’s Ministry of Commerce confirmed that they are working with the White House to resolve the trade conflict. A brief statement by the Ministry said that the meeting between US President Donald Trump and Chinese leader Xi Jinping was successful and there is confidence that the agreement reached will be implemented.

Today’s data showed, that Australia GDP grew by 0.3% qoq in Q3, below the expectation of 0.6% qoq. That’s also a sharp slow down from Q2’s 0.9%. On annual basis, GDP growth slowed to 2.8% yoy, well below expectation of 3.4% yoy.

The Bank of Canada will release its rate statement today. The BoC is widely expected to keep its benchmark interest rate at 1.75% level, amid lower oil prices and disappointing economic data. In its latest rate decision in October, when it raised the key rate to 1.75%, the central bank of Canada said it would monitor global trade policy developments and look at how heavily indebted households are adjusting to higher rates to help determine the pace of future rate increases.