Australian Dollar
Positive trade balance figures and the appointment of a new Governor for the Reserve Bank of Australia (RBA) allowed the ‘Aussie’ to make bullish gains yesterday. The previous month’s trade deficit was revised down significantly, with March’s figures showing a reduction in the shortfall of nearly -AU$900 million. Iron ore exports rose 10%, while iron ore exports to China increased 11%.
Meanwhile, it was announced that as of September Deputy Governor of the RBA, Philip Lowe, would take up the position of Governor. As a well-known and respected economist, Lowe’s appointment was well-received by the financial markets.
Today’s data from Australia includes the AiG Performance of Construction Index for April, the RBA Statement on Monetary Policy and foreign reserves figures. However, the ‘Aussie’ could find itself moved by the high-impact US Non-Farm Payrolls data if it causes a significant shift in the US Dollar.
Sterling
The Australian Dollar was on bullish form against Pound Sterling yesterday, helped by domestic developments and the poor UK data. In some respects, traders had anticipated the poor showing by the services and composite PMIs, but the final results were still a shock. The two indexes repeated the performance of the releases earlier in the week for construction and manufacturing, significantly undercutting the forecasts.
The only data due for the UK today is the figure for new car registrations in April.
Euro
A warning by ratings agency Moody’s caused the Euro to plummet yesterday, racking up losses of nearly -0.9% against the Australian Dollar during the European session. Moody’s claimed that a ‘small crisis’ was all that was needed to potentially cause the disintegration of the Eurozone and the European Union. As an example, the agency highlighted a potential ‘Brexit’, warning that a victory for the ‘leave’ campaign in the UK could trigger a wave of Euro scepticism across the currency union and bolster support for anti-austerity parties.
German construction and retail PMIs are due out today. Both indexes are currently showing solid growth.
US Dollar
A better-than-expected rise in the ISM Non-Manufacturing PMI helped boost appetite for the US Dollar yesterday, although mixed unemployment claims figures reminded traders of the seemingly precarious nature of the US economy. The number of initial jobless claims was 14,000 higher-than-forecast at 274,000, but the number of continuing claims fell -9,000 rather than the -2,000 predicted.
The Federal Reserve’s newest policymaker, Neel Kashkari stated that the US economy would not enter a recession in 2016, helping to ease some fears, although he also softened rate hike expectations after commenting that the Fed would need to see supportive data before it tightened monetary policy further.
Investors will be focussing on the unemployment rate and the Non-Farm Payrolls figure today, hoping for strong results that might signal the end of the current disappointing US data docket.
Canadian Dollar
The Canadian Dollar was on mixed form yesterday, generally staying out of negative territory and even making some bullish gains against stricken majors. This was despite a worse-than-expected fall in the number of building permits granted in March compared to February. After the previous month’s 15.5% surge, permits dropped -7%, disappointing forecasts for a more moderate decline of -4.4%.
Meanwhile, the continued progress of a raging wildfire outside the main Canadian oil sands city of Fort McMurray threatened crude oil production. 80,000 residents were forced to flee their homes and oil production was stifled by an estimated 800,000 barrels per day. This, combined with news of slowing US production, saw WTI Crude prices leap up 4.2% and Brent Crude climb 4%, giving the ‘Loonie’ some strength to counter the weakness brought on by stymied domestic production.
Some high profile data is due from Canada today. After last month’s huge 40,000 change in employment figure, a more modest rise of 5,000 is predicted, while unemployment is expected to creep up from 7.1% to 7.2%.
New Zealand Dollar
Yesterday’s calendar was bereft of New Zealand data. The New Zealand Dollar started the day weak, with the latest rise in unemployment weighing on sentiment, although by the end of the session the ‘Kiwi’ had begun to recover. The latest Chinese data worried investors, however, as the composite PMI edged down to 50.8, drawing dangerously close to contraction territory. The popularity of the surging ‘Aussie’ also weakened the ‘Kiwi’.
There is no New Zealand data due out today, although as with the Australian Dollar, the New Zealand Dollar could see significant movement in reaction to the US releases.
Data Released
May 6th 09.30 AUD AiG Performance of Construction Index (APR)
May 6th 11.30 AUD RBA Statement on Monetary Policy
May 6th 17.30 EUR Markit Germany Construction PMI (APR)
May 6th 18.00 GBP New Car Registrations (YoY) (APR)
May 6th 18.10 EUR Markit Germany Retail PMI (APR)
May 6th 22.30 USD Unemployment Rate (APR) 5.0%
May 6th 22.30 USD Change in Non-farm Payrolls (APR) 200k
May 6th 22.30 CAD Net Change in Employment (APR) 5k
May 6th 22.30 CAD Unemployment Rate (APR) 7.2%