Australian dollar drops sharply as the week opens and dives to four year low against the greenback. The selloff was attributed to the result of the gold referendum in Swiss which might dampen the depend for Australia's gold, which was a key driver of the exchange rate. The so called "Save Our Swiss Gold" referendum stipulated SNB to hold at least 20% of the CHF 520b balance sheet to gold. Such proposal was voted down by 77% to 23%. Gold opened the week sharply low to as low as 1141.7 and is trading at around 1150 at the time of writing. AUD/USD drops to as low as 0.8416 so far. Meanwhile, EUR/CHF opened the week high and reached as high as 1.2035 so far.
Economic data from China also gives some pressure to the Aussie. Manufacturing PMI dropped to 50.3 in November, hitting an eight month low. That compared to expectation of 50.5 and prior month's reading of 50.8. An economist at the Development Research Center said that "the continued decline in the November PMI indicated that economic growth is still in a downward trend." The HSBC China manufacturing PMI was unrevised at 50.0 in November. Released elsewhere, Japan capital spending rose 5.5% in Q3. Australia inflation expectation rose 0.1% mom in November. New Zealand terms of trade dropped -4.4% qoq in Q3.
Looking ahead, manufacturing data will be major focus today. Swiss SVME PMI is expected to drop to 53.1 in November. Eurozone PMI manufacturing is expected be unrevised at 50.4. UK PMI manufacturing is expected to drop slightly to 53.0 in November. UK will also release mortgage approvals and M4. US ISM manufacturing is expected to drop to 58 in November.
The coming week would be a busy one. We have 4 major central bank meetings and a number of critical economic data including the US employment report. Although all central banks are expected to leave the monetary policies unchanged, the focus would be the ECB meeting on Thursday. The new staff economic projections would likely show a sharp downgrade of economic outlook. BOC policymakers would also keep the powder dry in the December meeting on Wednesday. Yet, the OECD forecasts that the central bank would begin tightening in May 2015. The RBA meeting due Tuesday and the BOE on Thursday would be non-events with both central banks leaving the monetary decisions unchanged. More in The Week Ahead - ECB To Update Staff Projections, US Job Market Improves Steadily.