Better than expected Chinese GDP data saw strength in AUD in what was a relatively quiet session ahead of Thursday's ECB meeting
Overnight saw the release of mixed Chinese data, GDP (Q3 Y/Y 6.90% vs. Exp. 6.80% Prev. 7.00%) and retail sales beat expectations, while China’s industrial production missed. AUD and NZD benefited from the data, despite the headline GDP reading showing the slowest quarter of growth since Q1 2009. NZD/USD and AUD/USD continued to see strength throughout the European session, with a lack of tier 1 data or fundamental news from either the US or Europe. Oil, however, experienced softness throughout the session, amid mild USD strength, and as a result, CAD experienced weakness.
Weakness in EUR was also observed today, ahead of Thursday’s ECB rate decision and press conference. This comes after some analysts have stated the ECB is likely to signal its readiness to launch further stimulus before the year's end. However, it is worth noting that ECB’s Nowotny made some less dovish comments over the weekend, contradicting last week’s statements. EUR weakness has been particularly visible against GBP, as rate differentials continue to widen with the prospect of potentially diverging monetary policies from the BoE and ECB.
The EUR weakness has a direct result upon the USD index, which has continued to edge higher throughout the European session.
Looking ahead, tomorrow is once again data light in Europe; however, there are several speakers on the calendar: ECB's Linde and Nowotny, BoE's Carney and McCafferty, and Fed's Dudley and Powell. Also worth noting is the release of Fonterra dairy auction, which has no scheduled release time, but is usually released between 1500BST and 1600BST.