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Trending Economic: Afternoon Brief [03 November 15]

AUDUSD rally after the RBA has faded over the course of the day but this is largely on the back of USD strength than AUD weakness. AUD still remains the top gainer for the day among the G10 currencies and this is largely due to the RBA keeping overnight rates on hold as market has partially priced in a cut. 

The NZD on the other hand has weakened considerably, also the top loser in the G10 currencies, down 1.2% versus the USD. This is largely due to the fact that the New Zealand unemployment rate is expected to tick up to 6.0% in Q3 from 5.9% in Q2. New Zealand employment data come in at 2145 GMT.  Risk remains for NZD bears if employment numbers improve. 

USD has strengthened slightly over the course of the day, but US Factory orders for September have disappointed USD bulls. Factory orders have come in at a negative 1% compared to a 0.9% drop expected. This has had a slight negative impact on USD as EURUSD has jumped 15bp. We don’t see much downside for USD as yields have pick up around 15bp on US 2-year treasuries over the past week and CME Group FedWatch has now increased the probability of a Fed rate hike in December to more than 50 percent now at 52 percent. We see further strength in USD ahead of NFP numbers on Friday. 

Key event for EUR will be ECB’s President Draghi’s speech at 1900 GMT. Given earlier over the weekend, Draghi appeared to have had downplayed further QE. Also the German yields have been slightly firm over the past week and hence the markets will seek more dovish rhetoric from Draghi to keep bearish outlook on EUR.