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The Japanese Yen stabilized after it reached analysts’ forecast for its Industrial Production. The report came after Germany published its own report, which disappoints investors. This suggests that Japan was able to weigh down political and economic uncertainty trend around the world. Recently, Japan was able to come up with a deal together with the United States. This will end the threat made by President Trump against the country. Trump previously said he will impose tariffs to Japanese car manufacturing industry. Despite this, Japanese firms were still wary of the possibility of a “no-deal” Brexit. Today, October 15, Bank of England (BOE) Governor Mark Carney will speak regarding the country’s interest rate. The speech is expected to tackle the possibility of “no-deal” Brexit, which is expected to affect short-term interest rate. The speech will be concluded two (2) days before the EU Summit on October 17 and 18.
New Zealand’s Consumer Price Index report for the third quarter is expected to tick up today, its largest this year. The report is a result of the interest rate cut made by the Royal Bank of New Zealand (RBNZ). Aside from this, its year-over-year (YoY) CPI report is also higher than the third quarter of 2018. This will prevent the central bank from cutting another interest rate in the following months. Australia’s economy, on the other hand, was still trending lower amid the recent interest rate cut made on September. New Zealand’s interest rate now sits at 1.00%, while Australia was at 0.75%. This makes the New Zealand Dollar stronger compared to the Australian Dollar. Pressures also mount to Australia to join the United States in banning Huawei and its coalition on the Strait of Hormuz. Aside from this, New Zealand Prime Minister Jacinda Ardern met with U.S. President Donald Trump during the United Nation General Assembly.
Australian Dollar will continue to move lower amid failure by the central bank to stop Australia’s economy from spiraling down. The Reserve Bank of Australia (RBA) cut rates twice this year, a 50-basis point and a 25-basis point. Canada, on the other hand, was still holding to its interest rate at 1.8%. This shows that the Canadian Dollar will remain strong against the Australian Dollar until a rate cut has been made. Australia has been dragged from the escalating trade war between the United States and China. Australia was also pressured to realign its policies to the U.S. Recently, the U.S. asked the country to ban Chines telecom giant Huawei. Among the members of the Five Eyes Intelligence Alliance, only Canada didn’t bow down to U.S. pressure. The integrity of Canada’s foreign policies is seen by analysts as a major catalyst on why the Canadian Dollar remains strong amid high exposure to the U.S. Dollar.
The Australian Dollar is on the verge of going back to a downward track. This was after Japan was able to find a common ground with America and signed a bilateral trade agreement. 2019 was the year of successful trading deals for Japan. It ratified the pacific rim trade pact, the CPTPP (Comprehensive and Progressive Trans-Pacific Partnership). It also ratified the EU-Japan Free Trade Deal, which became the largest trading zone in the world. It also encouraged the public to make ways for the country to sign a post-Brexit trade agreement with the UK. Meanwhile, Australia is being pressured by the United States to take sides between the country and China. Australia’s exports to the EU were also tightened following its signing of post-Brexit trade agreement. The Bank of Japan said the country has more room to accommodate economic slowdown. Australia, on the other hand, cut rates twice this year.