Australian Dollar
The prospect of snap elections weakened the Australian Dollar yesterday, after parliament voted down a bill aimed at curbing the power of trade unions. Prime Minister Malcolm Turnbull had proposed the legislation and threatened to call a double dissolution election if it was not passed by the Senate. The move, which would result in the first election of its kind since 1987, would see the Senate seats being contested as well as the usual House of Representatives.
While his intended actions were having a weakening effect on the ‘Aussie’, Turnbull’s actual activities helped improve sentiment. The Prime Minister was in China yesterday, strengthening ties with the country responsible for receiving around 30% of Australian exports by signing five new partnership documents.
Weekly consumer confidence figures, the latest Reserve Bank of Australia (RBA) minutes and a speech from RBA Governor Glenn Stevens could move the ‘Aussie’ today.
Sterling
‘Brexit’ arguments weakened Pound Sterling again yesterday after the Treasury released their 200-page analysis of the impact a split from the European Union would have upon the UK. According to the document, the UK economy would be -6% smaller following a ‘Brexit’ by 2030 than if the UK remained in the EU. On a per-household basis, voters would be -£4,300 worse-off each year, the Treasury claimed.
The ‘Leave’ campaign have ridiculed the figures, arguing that it is impossible to forecast the state of the economy by 2030, while several leading analysts have come out in support of the findings.
Euro
The Euro was boosted yesterday by rising hopes of a resolution to the contentious issue of Greece’s debt. With a lack of agreement threatening to push the country into defaulting on its upcoming payments, investors expected necessity would dictate that a consensus had to be met. Also boosting the common currency was dwindling expectation that the coming policy meeting of the European Central Bank (ECB) would see any change in stimulus measures. Meanwhile, ratings agency Fitch released a statement observing that, while there is divergence in growth, there are widespread signs of a Eurozone recovery.
Today’s influential ZEW Surveys for Germany and the Eurozone could spark significant Euro movement.
US Dollar
A lack of domestic data yesterday saw investors awaiting a speech from New York Fed President William Dudley, keeping the US Dollar weak in the interim. Dudley warned against new threats and ‘significant uncertainties’. Although he said that he believed economic conditions in the US ‘finally warranted the start of US monetary policy normalisation’, the ‘Buck’ remained weak; perhaps as traders were disappointed by his continued suggestion that future policy adjustments would likely remain ‘gradual and cautious’.
A strengthening Euro also helped weaken the US Dollar thanks to the pair’s negative correlation.
Another Fed official, Eric Rosengren, is due to speak today. Housing starts and building permits figures will be released later on in the day.
Canadian Dollar
Another failed attempt to secure a production freeze by the world’s largest oil producers saw oil prices plummet, taking the Canadian Dollar with it. The meeting, between members and non-members of the Organization of Petroleum Exporting Countries (OPEC), was once again stymied by the refusal of Iran to participate in production cuts. Saudi Arabia will not comply with any freeze unless Iran does also.
As a result WTI Crude and Brent Crude oil prices both fell over -4%, dragging the ‘Loonie’ into negative territory.
New Zealand Dollar
Yesterday morning’s strong Consumer Price Index figures helped the New Zealand Dollar to start bullishly, although gains were slowly eroded during the course of the day. Quarter-on-quarter (QoQ) inflation rose from -0.5% deflation to 0.2%, ten basis points higher-than-forecast, while year-on-year (YoY) inflation leapt up from 0.1% to 0.4%.
The ‘Kiwi’ also received a boost from Prime Minister John Key’s trade mission to China, although warnings from the state media that Key should not intervene in the territory dispute in the South China Sea lest he ‘risk complicating the flourishing trade ties between China and New Zealand’ dampened sentiment.
As well as the Performance of Services Index, the next highly-influential GlobalDairyTrade auction will take place today. A rise in the price of milk will boost the New Zealand Dollar, while a drop will undermine the ‘Kiwi’.
Data Released
April 19th 11.30 AUD RBA April Meeting Minutes
April 19th 14.00 NZD Dairy Auction Whole Milk Powder MT (APR 19)
April 19th 14.00 NZD Dairy Auction Avg. Winning Price MT (APR 19)
April 19th 19.00 EUR Eurozone ZEW Survey (Economic Sentiment) (APR)
April 19th 22.30 USD Housing Starts (MoM) (MAR) -0.7%
April 19th 22.30 USD Building Permits (MoM) (MAR) 2.0%
April 19th 23.30 AUD RBA Governor Stevens Speech in New York