Australian Dollar
During Friday’s European session the Australian Dollar cooled versus most of its major peers thanks to damp market sentiment following disappointing Chinese ecostats. April’s Aggregate Financing came in at 751.0 billion, well below the market consensus of 1300.0 billion. In addition, April’s New Yuan Loans missed the median market forecast 800.0 billion with a result of 555.6 billion.
Also weighing heavily on demand for the ‘Aussie’ last Friday were several hawkish speeches from Federal Reserve officials. One standout comment came from Kansas City Fed President Esther George who stated that she believes the current interest rate levels are too low.
Over the coming week there will be a number of ecostats likely to cause AUD volatility. Tuesday’s Reserve Bank of Australia meeting minutes are likely to provoke ‘Aussie’ changes, however, it will be Thursday’s key labour market data that will be most closely watched by AUD traders.
Sterling
The British Pound put on a mixed performance during Friday’s European session as easing ‘Brexit’ concerns were somewhat countered by a larger-than-expected contraction in March’s Construction Output. The fact that the Bank of England (BoE) reduced 2016 growth forecasts from 2.2% to 2.0% has limited the appeal of the UK unit.
High-impact British ecostats will be somewhat thin on the ground this week. With that said, Tuesday’s British inflation data will be highly significant and likely to cause marked GBP movement. Later today, May’s Rightmove House Price data may see AUD/GBP fluctuate. However, EU referendum developments and market sentiment are more likely to drive Sterling exchange rates this week.
Euro
The combination of mixed domestic data and a strong US Dollar limited the appeal of the single currency during Friday’s European session. The improved Federal Reserve rate hike prospects could pile added pressure on European Central Bank (ECB) policymakers given concerns of widening policy divergence.
With a complete absence of high-impact domestic data over the coming week, the Euro is likely to see volatility in response to US Dollar positioning and market sentiment. If US data continues to support hopes of a near-term Fed rate hike, negative correlation would see the Euro tumble as the Dollar advances.
US Dollar
During Friday’s European session the US Dollar strengthened versus most of its peers following a number of hawkish speeches from Federal Reserve officials. As highlighted above, comments that current interest rate levels are too low significantly improved demand for the ‘Greenback’ (USD).
With several high-impact domestic data releases due out this week, the US Dollar is likely to be subject to volatile price-swings. Traders’ main focus will be Tuesday’s inflation data. Any sign of improved inflationary growth will solidify hopes of a near-term cash rate increase from the Federal Reserve.
Canadian Dollar
On Friday oil prices cooled as traders took profits following a recent surge. Oil futures are more positive, however, as reduced production from the US, Canada and Nigeria should cause global stockpiles to fall. With that in mind, the Canadian Dollar could well appreciate over the coming week. Fears that Canada’s export growth will be negatively impacted by the wildfire may limit ‘Loonie’ (CAD) upside, however.
Friday’s Canadian ecostats will be the only high-impact domestic data over the coming week. Retail Sales and Inflation reports will be closely watched by those invested in the Canadian unit.
New Zealand Dollar
The New Zealand Dollar was trending within a narrow range against the Australian Dollar last Friday thanks to dampened market sentiment following weak Chinese data and falling global equity prices. Today’s Performance of Services Index has the potential to cause ‘Kiwi’ movement.
With a lack of highly influential domestic data, those trading with the ‘Kiwi’ will be focussed on the weekly GlobalDairyAuction. If prices rise the New Zealand Dollar is likely to appreciate, although ongoing concerns that the Reserve Bank of New Zealand (RBNZ) will look to ease policy at the next available opportunity could weigh on demand for the high-yielding asset.
Data Released
May 17th 11:30 AUD RBA May Meeting Minutes
May 17th 18:30 GBP Consumer Price Index
May 17th 22:00 NZD GlobalDairyAuction
May 17th 22:30 USD Consumer Price Index
May 19th 11:30 AUD Unemployment Rate
May 19th 11:30 AUD Employment Change
May 20th 22:30 CAD Consumer Price Index