Australian Dollar
The markets were in disarray yesterday as fresh concerns over China’s economy mixed with fears over the potential for the UK to split from the EU. However, despite these global headwinds, which dragged stocks and commodities lower, the Australian Dollar actually trended bullishly against many of its peers. While Chinese retail sales and urban investment edged lower in May, industrial production unexpectedly held steady at 6%, boding well for Australian mineral exports. Also providing support for the ‘Aussie’ was news that gold prices had hit a four-week high as a result of risk-aversion. Gold is one of Australia’s top exports, so the high-yield Australian Dollar advanced, despite market sentiment.
Australian data today consists of the Consumer Inflation Expectation and the NAB Business Conditions and Confidence indexes.
Sterling
The Australian Dollar trended bullishly against Pound Sterling for most of yesterday’s European session, although gains softened towards the end of trading. Traders were reacting to the latest referendum poll, which was released just before the weekend, showing that the ‘Leave’ campaign had extended a 10% lead on the ‘Remain’ camp. However, the ‘Remain’ side were campaigning hard, with speeches from Gordon Brown and Hilary Benn, with further support coming from chair of the Commons Treasury Committee Andrew Tyrie who announced that he would be voting for the UK to stay in the European Union.
UK inflation data is due for release today, although it remains to be seen how much investors will heed the figures when the main focus is firmly on the approaching referendum vote.
Euro
A lack of domestic data left the Euro in the grips of market sentiment yesterday, which saw the common currency make strong advances against the majority of its peers. Safe-haven demand helped the Euro to appreciate, assisted by the negative correlation that exists between the single unit and the weakening US Dollar. Also providing Euro support were suggestions that the European Central Bank (ECB) may not increase stimulus measures in the near future. Bundesbank President and ECB policymaker Jens Weidmann commented that the bank’s focus was on achieving price stability in the medium-term, rather than the short-term. This meant the bank could afford to wait and assess the impact of the latest round of monetary loosening before deciding if more easing was necessary.
Eurozone industrial production stats for April is the only impactful data release scheduled for today.
US Dollar
The US Dollar put on a mixed performance yesterday, despite global risk aversion. A minor slowdown in Chinese retail sales and a drop in urban investment from 10.5% to 9.6% year-on-year raised fresh concerns over China’s economy. This drove people towards safe-haven assets, but with this week’s Federal Reserve interest rate decision looming and markets pricing in just a 1.9% chance of a rate hike, the ‘Greenback’ was not an attractive prospect.
US advance retail sales figures for May are due for release today. Given that the ‘Greenback’ is already gripped by ‘Brexit’ fears and anticipation that the Federal Reserve will make no changes to monetary policy, even the forecast slowdown in growth from 1.3% to 0.3% may not soften the US Dollar much further.
Canadian Dollar
A continued slide in crude oil prices, with Chinese fears sparking a commodity rout, dragged the Canadian Dollar lower yesterday. Brent and WTI crude both dropped by around -1.4% during the session, with Brent Crude falling back below the key US$50 per barrel mark. A warning from the International Monetary Fund (IMF) further weakened the ‘Loonie’ after claiming that Canada’s economic recovery faces risks from long-term low commodity prices and the potential of a housing market downturn in Toronto and Vancouver.
There is no impactful Canadian data due for release today.
New Zealand Dollar
The New Zealand Dollar spent most of yesterday’s session making bullish advances against the majors. A weakening US Dollar helped the ‘Kiwi’ to advance, despite the bearish state of global stock markets. Anticipation of strong results from the GDP figures set for release later in the week was also fuelling New Zealand Dollar demand.
There are no high-impact data releases for New Zealand today.