Australian Dollar
‘Brexit’ uncertainty put the markets firmly in bear-mode yesterday, weakening the Australian Dollar. Even without global headwinds, there was plenty happening at home to weaken the ‘Aussie’. The NAB Business Confidence index for May dropped from 5 points to 3, while the Committee for Economic Development of Australia (CEDA) warned that the country’s credit rating could be at risk. CEDA forecast that, unless the government took more steps to repair the budget, Australia could lose its triple A rating. Meanwhile, the Australian Institute released a report showing that the current government was the worst for economic management since 1949.
The Westpac Consumer Confidence index for June is set for release today.
Sterling
AUD/GBP made bullish gains at the start of the European session yesterday, although these softened towards the close of trading. Pound Sterling was initially harmed by fresh ‘Brexit’ concerns; chiefly that more polls showed a strong lead for the ‘Leave’ campaign and The Sun newspaper declared its support for a ‘Brexit’. However, the latest consumer price data for the UK managed to somewhat restore Pound Sterling’s fortunes, despite the disappointing figures. Inflation remained at 0.3% and relief that price growth hadn’t slowed saw AUD/GBP give up some of its gains.
UK labour market data, including the claimant count rate for May and average weekly earnings figures for April, is set for release today.
Euro
The Euro slumped yesterday in spite of safe-haven demand due to heightened fears of a ‘Brexit’. Fearing the impact of a split on the EU and therefore the common currency, traders turned to safer assets. As a result, German 10-year bond yields turned negative; a historic development as risk-aversion caused several previous market records to be smashed. Further unsettling the markets were comments from the Greek central bank chief, who called the budget conditions imposed upon Greece by creditors ‘unrealistic and socially unattainable’. Even a better-than-expected result for Eurozone industrial production in April failed to boost the common currency.
The only Eurozone data due for release today is the Eurozone trade balance for April. The Euro could find itself moved by continuing fears of a UK split from the EU.
US Dollar
Safe-haven demand boosted the US Dollar yesterday, with further support coming from the advance retail sales figures for May. Sales growth had been expected to slump from 1.3% to 0.3%, but instead only fell to 0.5%. This suggested that consumers were not being put off spending by the Presidential election or the UK’s ‘Brexit’ referendum to the extent economists had originally predicted. There has been no change to market expectations of a rate hike, however.
The US is set to release mortgage application figures, as well as manufacturing and industrial production statistics today.
Canadian Dollar
The Canadian Dollar managed to advance against many of its peers yesterday, although it made small loses against the Australian Dollar and the US Dollar. While commodities slumped and crude oil remained below US$50 per barrel, domestic news was more promising. The Organisation for Economic Co-operation and Development (OECD) expressed its confidence in the Canadian government’s infrastructure spending, while the ratio of Canadian household debt to income ticked slightly lower.
The Canadian Dollar could find some support from today’s existing home sales figures for May, providing the figure shows positive growth in the number of property transactions.
New Zealand Dollar
A strengthening US Dollar and global risk-aversion weakened the New Zealand Dollar yesterday, although a slumping Pound Sterling and Euro left room for the ‘Kiwi’ to advance. Global stock markets fell on ‘Brexit’ jitters, with the UK and European indexes hitting three-month lows and Japanese bond yields falling to a new record low at -0.185%.
Today’s GlobalDairyTrade results are likely to have a significant impact upon the New Zealand Dollar. The last two events have seen prices rise and a continuation of this trend could strengthen the ‘Kiwi’ considerably.
Data Released
June 15th 10.30 AUD Westpac Consumer Confidence (JUN)
June 15th 18.30 GBP Claimant Count Rate (MAY) 2.1%
June 15th 21.00 USD MBA Mortgage Applications (JUN 10)
June 15th 22.00 NZD Dairy Auction Avg. Winning Price MT (JUN 15)
June 15th 23.00 CAD Existing Home Sales (MoM) (MAY)