- ‘Aussie’ Rebounds on Rising Commodity Prices – Strong iron ore benefits domestic miners
- AUD/GBP Advances on latest ‘Brexit’ Fears – UK voter registration website crashes
- AUD/EUR Holds Opening Levels – Empty Eurozone data day leaves Euro with little support
- New Zealand Dollar Bullish – ‘Kiwi’ advances on anticipation of interest rate freeze
Australian Dollar
Surging commodity prices helped the Australian Dollar to recover from earlier weakness yesterday. Domestic data was poor overall, with home loans growing by 1.7% rather than the forecast 2.8% and investment lending falling by -5% after dropping -0.8% in the previous month. The value of loans in April grew just 0.1%.
However, a strong advance for commodity prices, with the Bloomberg Commodity index advancing over 1.4%, helped the Australian Dollar to recover later in the session. Investors were further cheered by the news that higher iron ore prices had improved Australian mining company Rio Tinto’s cash flow to the extent where the company was able to launch a second round of debt buybacks. The AU$3.9 billion worth of repurchased debt will improve the company’s balance sheet going forward.
There is no data due from Australia today, although several overseas developments could move the ‘Aussie’. The Chinese consumer and producer price indexes could further fuel concerns over China’s economy if they disappoint, cooling risk appetite. Elsewhere, this morning’s Reserve Bank of New Zealand (RBNZ) interest rate decision could make the New Zealand Dollar the high-risk currency of choice unless the bank unexpectedly cuts rates.
Sterling
Concerns over the outcome of the EU referendum weighed on Pound Sterling, allowing the Australian Dollar to make small gains. News that the government’s official voter registration website had crashed an hour before the deadline sparked a frantic debate over whether or not the registration window should be extended to allow more people to vote. ‘Remain’ campaigners in particular were desperate for this to happen, as the majority of those attempting to register at the last minute were young voters; a demographic more likely to support remaining in the EU.
Uncertainty over the outcome of the vote overshadowed the strong domestic data, which showed a significant rebound in the UK’s industrial sector. Manufacturing production rose 2.3% on the month and 0.8% on the year, while overall industrial production increased 2% on the month and 1.6% on the year.
Today’s UK trade balance figures are predicted to show a small narrowing of the trade deficit, although with the referendum only two weeks away, it is likely that UK domestic data will have a significantly muted impact on Pound Sterling.
Euro
High risk appetite kept the Euro mostly weak yesterday, with only a few small gains being made against weaker currencies. A lack of domestic data left the Euro without support against bullish commodity prices. Further weakening sentiment towards the common currency was a forecast from the Spanish central bank, which predicted that the government would take a year longer than it claimed to reduce the country’s deficit back below EU target levels.
Today is light in terms of impactful Eurozone data, with only German trade balance data set for release, which is expected to show a narrowing of the trade surplus. European Central Bank (ECB) President Mario Draghi is due to speak at the Economic Forum in Brussels, so there is potential for Euro movement if he discusses Eurozone monetary policy.
US Dollar
Global growth concerns weighed on the US Dollar as Fed rate hike bets floundered below 4%. Chinese trade figures disappointed, adding to concerns that the Chinese economy was weakening. The trade surplus increased, but only by half of the US$10 billion forecast, rising to US$49.98 billion. Exports saw a slightly worse-than-expected acceleration in decline, dropping -4.1% after a fall of -1.8% the previous month. Further adding to US Dollar woes was the latest forecast from the World Bank, which predicted that the US economy would slow in 2016, growing -0.5% less than in 2015 at 1.9%.
US joblessness figures are due out later today and are expected to show a small increase in initial jobless claims, but a marginal drop in continuing claims.
Canadian Dollar
Strong oil protected the Canadian Dollar from the negative impact of disappointing housing market data for May and April yesterday. The rate of housing starts in May slipped further-than-expected down to 188.6k, while the number of building permits issued in April declined -0.3% rather than expanding by the predicted 1.5%. Oil was on the rise, with Brent Crude advancing to within a few cents of US$52.50 per barrel.
Further housing data and the Capacity Utilization Rate is due for release today.
New Zealand Dollar
Poor first-quarter manufacturing data failed to weaken the New Zealand Dollar yesterday, which entered a bullish charge thanks to the rising commodity prices. Quarter-on-quarter manufacturing activity volume for the first three months of 2016 declined -1.2% after downwardly-revised 0.8% growth towards the end of 2015. Manufacturing activity during the same period fell -2.6%, accelerating from the downwardly revised -2.3%. However, high risk appetite, which undermined the US Dollar and the Euro, helped to keep the New Zealand Dollar strong.
Anticipation of this morning’s interest rate decision by the Reserve Bank of New Zealand (RBNZ) also kept the ‘Kiwi’ strong. Markets were not predicting any change to the 2.25% official cash rate.
June 9th 07.00 NZD Reserve Bank of New Zealand Rate Decision (JUN 9) 2.25%
June 9th 17.00 EUR ECB’s Draghi Speaks at Economic Forum in Brussels
June 9th 18.30 GBP Visible Trade Balance (Pounds) (APR) -£11,000m
June 9th 22.30 USD Initial Jobless Claims (JUN 4) 270k
June 9th 22.30 USD Continuing Claims (MAY 28) 2171k
June 9th 22.30 CAD New Housing Price Index (YoY) (APR)