- ‘Aussie’ Weakened by Iron Ore – Commodity price falls to near three-month low
- AUD/GBP Loses Ground after Corbyn Referendum Speech – Labour leader attempts a ‘nicer’ approach to referendum campaigning
- AUD/EUR Flat – No ECB policy changes, but Draghi reiterates bank always prepped to act
- New Zealand Dollar Mixed – ‘Kiwi’ softened by OECD forecasts
Australian Dollar
Yesterday’s positive trade data was quickly overshadowed by the latest concerns over the price of iron ore, pushing the Australian Dollar deep into negative territory. Initially forecast to narrow slightly to -2100 million, the deficit instead shrank to -1579 million, while the previous month’s figure was revised down to -1971 million. However, the latest retail sales figures soured the positive news, with growth in consumer spending slipping further-than-expected to 0.2%.
Meanwhile, iron ore prices slipped towards a three-month low, causing the ASX 200 stock index to fall -0.8%. Banks and mining companies were the worst hit by the slide, with Westpac shares slumping -1.5% and Rio Tinto dropping -2%.
The Australian Performance of Services Index is due out today, however the results of this could be completely overlooked due to the release of the US Non-Farm Payrolls report.
Sterling
The Australian Dollar lost some ground to Pound Sterling yesterday as the UK asset began to recover from the shock of the ‘Brexit’ polls published earlier in the week. The Markit construction PMI for May declined unexpectedly, however, the latest referendum developments seem to have improved investor confidence again. Labour leader Jeremy Corbyn gave a divisive speech in which he criticised the ‘Remain’ campaign’s ‘Project Fear’ approach, suggesting that the Treasury’s forecasts were greatly exaggerated. While some accused him of undermining the campaign to remain in the European Union, others claimed that his strong defence of the EU’s policies on worker’s rights and his assertion that government policy is to blame for the negative effects of immigration are a welcome attempt at a ‘nicer’ campaign.
Today sees the release of the key Markit services PMI, which could strengthen Pound Sterling if it shows the predicted uptick in sector activity.
Euro
The European Central Bank (ECB) made no changes to monetary policy during yesterday’s meeting. President Mario Draghi took much the same line at the press conference as he has at those following previous meetings, but his insistence that the ECB stood ready to act again kept the spectre of even looser Eurozone monetary policy firmly on investor’s minds. The policy meeting out of the way, trader focus returned to the day’s data, which boded ill for inflation after producer prices dropped -4.4% in April.
A raft of low-impact PMIs for the Eurozone, as well as Eurozone retail sales figures, are set for release today, but the Euro could find itself at the mercy of the US Dollar thanks to the key Non-Farm Payrolls data on the calendar.
US Dollar
Solid US jobs data helped the US Dollar advance yesterday. After employment change of 156k in April, the labour market created 173k new jobs in May; just -2k lower than the forecast. Meanwhile, initial jobless claims printed -1k lower than the previous month rather than rising by 2k, with the final figure coming in at 267k.
Today’s US Non-Farm Payrolls data is considered key not just for the US, but for many global currencies. Considered the most important economic measure to be released before the Fed will meet in June to decide upon interest rates, a strong result here could all-but cement the chances of tighter monetary policy. The important ISM non-manufacturing composite is also due out today.
Canadian Dollar
The Canadian Dollar was weakened yesterday after the Organisation of Petroleum Exporting Countries (OPEC) once again failed to agree a new production ceiling, pushing oil down -1.75%. Last year’s production cap of 30 million barrels per day has long-since been abandoned and members failed to sign up to a new cap. The cartel is currently producing 32.5 million barrels of oil per day and several members had hoped that this could be fixed as the new production ceiling, to no avail.
Only low-impact data for Canada is set for release today, with the US data threatening downside risks for the ‘Loonie’.
New Zealand Dollar
There was no domestic economic data of note from New Zealand yesterday, although a forecast from the Organisation of Economic Co-operation and Development (OECD) softened the New Zealand Dollar’s advances. According to the OECD, New Zealand’s economic growth is set to be hit by low dairy prices and the cost of rebuilding key areas recently hit by earthquakes.
There is no New Zealand data due out today; however, as a high-risk asset the ‘Kiwi’ looks to be pretty vulnerable to the latest US reports.
Data Released
June 3rd 09.30 GBP Markit/CIPS UK Services PMI (MAY) 52.5
June 3rd 09.30 GBP Markit/CIPS UK Composite PMI (MAY) 52.3
June 3rd 10.00 EUR Eurozone Retail Sales (YoY) (APR 2.1%
June 3rd 13.30 USD Unemployment Rate (MAY) 4.9%
June 3rd 13.30 USD Change in Non-farm Payrolls (MAY) 160k
June 3rd 15.00 USD ISM Non-Manufacutring Composite (MAY) 55.4