- ‘Aussie’ Bullish on Strong GDP – Gains ebb towards end of trading
- AUD/GBP Charges on Slashed UK GDP Forecast – OECD also warns of negative ‘Brexit’ impact
- AUD/EUR Slumps on ECB Meeting Expectations – No changes to monetary policy anticipated
- New Zealand Dollar Strong on Dairy Price Rise – Latest auction shows second consecutive gains
Australian Dollar
Weak Chinese data caused a few jitters among investors yesterday and weighed on the Australian Dollar. While the manufacturing PMI held steady at 50.1 instead of dropping to the forecast stagnation score of 50, the non-manufacturing PMI slipped from 53.5 to 53.1. However, the Australian Dollar managed to make bullish gains after the first-quarter Australian GDP figures were released. Predictions had been for a drop from 3% to 2.8%, but the results instead showed growth of 3.1%.
Today’s Australian trade balance figures for April are expected to show a small narrowing of the deficit from -2163 million to -2100 million, while seasonally-adjusted retail sales growth is predicted to have slowed from 0.4% to 0.3%.
Sterling
The Australian Dollar was able to make bullish gains against Pound Sterling yesterday after the Organisation for Economic Co-operation and Development (OECD) released its updated economic forecasts. According to the OECD, the UK economy will grow just 1.7% over the course of 2016, a -0.4% downgrade to the forecast made only three months ago. The OECD pins much of this slowdown on rising ‘Brexit’ fears and predicts that leaving the EU could see UK GDP -3% lower by 2020.
The day’s UK data also disappointed, with consumer credit and mortgage approvals falling and Markit manufacturing PMI edging into growth territory, reminding traders of the stricken condition of the sector.
Today sees the release of the Markit/CIPS UK construction PMI and a speech from Bank of England (BoE) Governor Mark Carney.
Euro
Eurozone factory growth may have hit a three month low in May, but the Euro held a strong position overall yesterday. The German, Italian and Spanish manufacturing PMIs all either dropped unexpectedly or declined further than forecast. Eurozone manufacturing PMI held steady at 51.5. The OECD urged governments to increase their spending while stating that policymakers should do more to stimulate the economy. If any took that to mean that the European Central Bank (ECB) would deliver another round of easing at today’s policy meeting, the Euro ignored it. Confidence that there would be no change from the Governing Council today helped keep the Euro on a strong footing, aided by a weakened US Dollar.
US Dollar
The US Dollar spent much of the day deep in negative territory against the majors, ahead of the key ISM manufacturing index release. The final result defied predictions of a drop from 50.8 to 50.4, instead rising to 51.3. The ISM prices paid index also saw a strong increase, climbing from 59 to 63.5. Towards the end of the session, the US Dollar had softened its losses as investors bought back into the ‘Greenback’. However, the positive impact of the data was undermined somewhat by news that construction spending fell -1.8%, representing the largest monthly decline since the beginning of 2011. This has the potential to cause economists to downgrade their economic forecasts for the second quarter.
Today’s US data includes initial jobless claims and continuing claims figures for May.
Canadian Dollar
Falling oil prices and a slight decline in the manufacturing sector weakened the Canadian Dollar yesterday. The US Dollar may have slumped ahead of the ISM data, but global risk-appetite was firmly off. Commodities declined, with crude oil making a loss of -1.7% during the European session. Investor sentiment was further dampened by the latest OECD economic forecasts for Canada, which showed Canadian GDP would significantly lag behind global growth.
There is no Canadian data due for release today.
New Zealand Dollar
The New Zealand Dollar was able to make several strong gains yesterday thanks initially to the weakened state of the US Dollar, even though commodity prices were on the decline. Later, the ‘Kiwi’ found even more support after the results of the latest GlobalDairyTrade auction yielded a 3.4% rise in dairy prices. The average winning price increased from US$2,283 to US$2,329.
There is no impactful New Zealand data due out today.
Data Released
June 2nd 11.30 AUD Trade Balance (Australian dollar) (APR) -2100m
June 2nd 18.30 GBP Markit/CIPS UK Construction PMI (MAY) 52.0
June 2nd 21.45 EUR European Central Bank Rate Decision (JUN 2) 0.00%
June 2nd 22.30 USD Initial Jobless Claims (MAY 28) 270k
June 2nd 22.30 USD Continuing Claims (MAY 21) 2152k