Australian Dollar
The Australian Dollar was weakened yesterday after Deloitte Access Economics placed the budget deficit clearly in the centre of the election battle. In its respected Budget Monitor report, the organisation pointed out that the country’s debt was growing faster than revenue, forecasting deficits in 2018-19 being -$21 billion larger than the predictions made five months ago. Deloitte warned that all parties in the election need to demonstrate a clear plan for Australia’s finances, warning that the electorate was in danger of ‘sleepwalking through another election campaign’.
Regardless, the ‘Aussie’ did manage to make gains on other commodity-correlated currencies, as well as the US Dollar.
The release of inflation data will be a key driver of Australian Dollar movement on Wednesday.
Sterling
A better-than-expected result from the CBI Industrial Trends Survey and a well-received pro-EU speech from Home Secretary Theresa May saw AUD/GBP slump yesterday. Although businesses continued to see orders decline, the CBI index showed that the pace had slowed from -14 to -11 in April, rather than accelerating to -15 as anticipated.
Theresa May’s speech may have caused some controversy after the Home Secretary once again declared that the UK must withdraw from the European Convention on Human Rights (ECHR), but overall her comments were welcomed. A more reluctant EU supporter, May has been cited by many in the ‘Remain’ campaign as providing a voice that less-evangelic voters can identify with.
Today’s only UK data release is the BBA Loans for House Purchase figures, which could further weaken AUD/GBP if they show the expected uptick from 45892 to 46500.
Euro
The latest German IFO survey may not have met forecasts, but the Euro nonetheless remained bullish yesterday. Traders had priced in another dovish press conference from Mario Draghi following the latest European Central Bank policy meeting last week, but in the end were surprised to receive a robust defence of Eurozone monetary policy. Correctional trading therefore played a large part in driving up the common currency after the weekend.
The German IFO indexes all disappointed, with the business climate and current assessment scores dropping unexpectedly, while the expectations index failed to rise as-far-as-forecast. However, the relatively small decline wasn’t enough to suggest a significant change in sentiment.
There is no impactful Eurozone data due out until Wednesday, when the GfK German Consumer Confidence survey is expected to show that sentiment has held steady.
US Dollar
Poor data during yesterday’s North American session further compounded the weak appetite for the US Dollar, causing the ‘Greenback’ to sink across the board. Uncertainty over the future path of US monetary policy had initially weighed on the ‘Buck’, with the contradictory attitudes recently displayed by various Fed officials giving no clear direction on future interest rate decisions. Later, housing data disappointed, with New Home Sales falling -1.5% in March instead of seeing a slowdown in growth to 1%.
Today sees the release of the highly-impactful preliminary Durable Goods Orders figures for March, which are anticipated to have grown 1.9% after dropping -3% previously.
Canadian Dollar
Sentiment in the oil markets waned yesterday, dragging the Canadian Dollar down. The approaching first quarter earnings figures from the world’s largest oil producers were anticipated to reveal just how hard the industry has been hit in recent months. News that producers are now hedging their production at costs they once would have scoffed at, combined with a warning from the International Monetary Fund (IMF) that Middle Eastern countries are set to lose -US$500 billion this year further weakened sentiment. As a result, the Canadian Dollar slumped.
Bank of Canada (BOC) Governor Stephen Poloz is due to speak in New York today, so there is the potential for volatile ‘Loonie’ movement later on.
New Zealand Dollar
Confidence that the Reserve Bank of New Zealand (RBNZ) does not intend to cut interest rates during this week’s monetary policy meeting helped the ‘Kiwi’ appreciate yesterday. With interest rate decisions by the US Federal Open Market Committee (FOMC) and the Bank of Japan (BOJ) weakening safe haven demand, the New Zealand Dollar was an inviting prospect for investors and trended bullishly against the majors, although it sank verses the Pound and the Euro.
New Zealand trade figures are due out on Wednesday and are anticipated to show that the trade surplus increased in March from 339 million to 401 million.
Data Released
April 25th 18.30 GBP BBA Loans for House Purchase (MAR) 46500
April 25th 22.30 USD Durable Goods Orders (MAR P) 1.9%
April 25th 22.40 CAD Bank of Canada’s Poloz Speaks in New York
April 27th 08.45 NZD Trade Balance (New Zealand dollars) (MAR) 401m
April 27th 11.30 AUD Consumer Prices Index (YoY) (1Q) 1.8%
April 27th 16.00 EUR German GfK Consumer Confidence Survey (MAY) 9.4