Sterling rises as BOE remains divided on interest rates
The New Zealand dollar rose after the country’s statistics office released its final reading of Q3 GDP data. The economy expanded by 0.7% in the quarter, boosted by retail spending. This followed a 0.1% increase in the second quarter. It was also higher than the consensus estimates of 0.6%. The retail sector rose by 2.4% in the quarter. This was mostly because of increased spending on electronics, mobile phones, and computers. Meanwhile, the important services sector, which makes up two-thirds of the economy rose by 0.4%, which was lower than the 0.8% gain in the second quarter. For the year to September, the economy rose by 2.7% after rising by 2.4% to June.
The Australian dollar rose while stocks declined after the bureau of statistics released November jobs data. The trend unemployment rate declined by less than 0.1% to 5.2%. This was better than the consensus estimates of 5.3%. In the month, the economy added 17k jobs, with most of them being part-time workers. 8K people were employed full-time with 9k people being employed part-time. The trend in employment has increased by 269k people (2.1%) in the past 12 months. The underemployment rate remained at 8.4%, which was a slight increase of 0.1% while the underutilization rate remained at 13.6%.
The sterling rose after the BOE delivered its interest rates decision. As was widely expected, the central bank left rates unchanged at 0.75%. Seven members voted in support of the rate decision while others voted against the decision. The members also voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, currently at £10 billion monthly. This was the first rate decision since the Thursday election. The bank also warned that it may be forced to tighten policy if the economy makes even modest gains in the coming year. The bank also said that:
The biggest news since November had been on global trade and domestic policy developments, but it was too early to judge how the material that would prove to be for the economic outlook.
The AUD/NZD pair was relatively unchanged today after the two positive data releases from Australia and New Zealand. The pair is trading at 1.0436. This is higher than yesterday’s sharp decline, which led the price to a low of 1.0363. The price is between the middle and upper line of the Bollinger Bands. The RSI has moved from a low of 30 to the current level of 58. The signal and main lines of the RVI have moved upwards. There is a possibility that the pair will see little volatility for the remaining part of the year.
The USD/JPY pair declined slightly after the Bank of Japan delivered its interest rates decision. The bank left rates unchanged as was widely expected. The pair has formed a symmetrical triangle pattern on the hourly chart. This consolidation has seen the pair trade along the 14-day and 28-day moving averages. A drop below the current level of 109.50 could see the pair drop to the important support of 109.40. Nonetheless, the pair will likely break out in either direction in the next few days.
The EUR/USD pair rose slightly today to a high of 1.1145. This is a level that is higher than yesterday’s low of 1.1110. As with the USD/JPY pair, the EUR/USD pair has formed a symmetrical triangle pattern. The price is slightly above the short and medium-term moving averages. The RSI has been moving upwards. The tip of the symmetrical triangle pattern is still not close. This means that the pair may continue consolidating.