Australian Dollar
Weakness in the US Dollar helped the Australian Dollar advance yesterday, although a lack of domestic strength meant that the ‘Aussie’ slumped against a firming Pound Sterling. That being said, news that the contract for 12 new submarines for the Australian navy has been awarded to a French company that will build the vessels in Adelaide lent some support.
The move will sustain 2,800 jobs and boost demand for local steel in the region and is considered a largely political move (other bidders for the contract included Germany and Japan) as it could help win voter support in the upcoming election.
The highly-influential Consumer Price Index is due out later today. Predictions for a ten basis point uptick in both the quarterly and yearly figures would strengthen the Australian Dollar if realised.
Sterling
AUD/GBP slumped yesterday as investors began to realise that fears of a ‘Brexit’ could have been overly priced into Pound Sterling. The recovery followed last week’s strong performance from the ‘Remain’ campaign, which received a boost from the Treasury’s ‘Brexit’ forecast, recent poll results and intervention from US President Barack Obama.
Another poll released yesterday showed that voter turnout among pro-EU supporters was on the increase, while that of ‘Brexit’ supporters remained the same. This was seen as a crucial development because previous polls have shown that apathy among supporters of Britain’s EU membership was largely responsible for the predictions of victory for Vote Leave.
Today’s UK Gross Domestic Product figures are expected to show a minor slowdown in growth which could erode some of yesterday’s GBP gains.
Euro
Thanks to the inverse correlation between the Euro and the US Dollar, the common currency managed to appreciate yesterday afternoon after starting the day in a weak position against some of the majors. The single currency was unable to find domestic support thanks to an empty data calendar. However, an optimistic outlook on the Greek debt discussions from German Finance Minister Wolfgang Schäuble helped to heal sentiment.
Today sees the release of the GfK Consumer Confidence Survey, which is predicted to show that sentiment held steady at 9.4.
US Dollar
US data continued to underperform yesterday, with the Durable Goods Orders figures becoming the latest publication to disappoint forecasts. Although the move out of contraction territory was welcomed, orders fell -3.1% in February so the fact that orders only increased 0.8% rather than the 1.9% forecast saw the US Dollar tumble.
Once again, the latest data has suggested a weaker US economy than many, including several Federal Reserve officials, have tried to claim. The day’s earlier data releases – which were mostly overlooked ahead of the headline release – have further added to the negative bigger picture. New home sales dropped -1.5% instead of seeing a slowdown in growth from 2% to 1.6%.
As a result, sentiment towards the US Dollar remained cold, with the ‘Greenback’ plummeting across the board. Today’s mortgage applications and advance goods trade balance could provoke some movement in the ‘Greenback’, although the recently-released consumer confidence results may dominate sentiment.
Canadian Dollar
Brent Crude oil made strong gains to advance above US$45 per barrel, yet the Canadian Dollar remained weak yesterday. A speech from Bank of Canada (BOC) Governor Stephen Poloz failed to boost sentiment, despite suggesting that the current global economic slowdown presented opportunities rather than cause to worry for Canadian businesses. It seems that investors were paying more attention to Poloz’s defence of loose monetary policy, which suggested that the BOC was in no rush to raise interest rates in the near future.
There is no domestic data for Canada today.
New Zealand Dollar
Uncertainty ahead of Thursday’s interest rate decision by the Reserve Bank of New Zealand (RBNZ) worked to dampen appetite for the New Zealand Dollar yesterday. US Dollar weakness allowed the ‘Kiwi’ to make some gains, but it remained soft overall. The markets are currently split on whether or not the RBNZ will choose to cut interest rates again, although the current forecast is that the next change in interest rates won’t happen at the forthcoming meeting.
The New Zealand Dollar is likely to remain weak until tomorrow, although today’s trade balance figures could boost the ‘Kiwi’ if they show the expected widening in the trade surplus.
Data Released
April 27th 00.00 USD Consumer Confidence (APR) 96.0
April 27th 08.45 NZD Trade Balance (New Zealand dollars) (MAR 401m
April 27th 11.30 AUD Consumer Prices Index (YoY) (1Q) 1.7%
April 27th 16.00 EUR German GfK Consumer Confidence Survey (MAY 9.4
April 27th 18.30 GBP Gross Domestic Product (YoY) (1Q A) 2.0%
April 27th 21.00 USD MBA Mortgage Applications (APR 22)
April 27th 22.30 USD Advance Goods Trade Balance (MAR) -$62.800b