Australian Dollar
The return of risk appetite pushed the Australian Dollar into a bullish recovery yesterday as stock markets recovered from Tuesday’s ‘Brexit’ fears. Weakness in the US Dollar also boosted the ‘Aussie’, while warnings over Australia’s neutral nominal cash rate were largely ignored. ANZ had warned that the neutral cash rate – the level at which the Australian economy can steadily grow without forcing consumer prices higher – is currently significantly below the level held prior to the global financial crisis. Because of this, ANZ reiterated its belief that the Reserve Bank of Australia (RBA) would have to cut interest rates again in the near-term.
Key data is due from Australia today in the form of the unemployment rate and employment change figure. The net balance of people newly employed is expected to be higher than April’s figure, although the unemployment rate is not forecast to change from the current 5.7%.
Sterling
The Australian Dollar advanced on Pound Sterling yesterday, although a recovery from Tuesday’s slump and some strong UK labour market data limited ‘Aussie’ gains. The UK claimant count remained steady at 2%, but the claimant count change dropped from 6.4k to -0.4k despite forecasts suggesting there would be no change in the number of people claiming out of work benefits. The ILO unemployment rate for the three months to April surprised after it ticked lower to 5% – the lowest level since 2005.
UK retail sales and the latest Bank of England (BoE) interest rate decision are due today. It is highly unlikely the Monetary Policy Committee (MPC) will make any changes, especially given the looming referendum vote.
Euro
A record high Eurozone trade surplus and weakening US Dollar failed to keep the Euro out of negative territory yesterday. On a seasonally-adjusted basis the trade surplus grew to a record €27.5 billion in April, partly thanks to a -5% fall in the rate of imports. The strong data boosted hopes that second quarter GDP would put in a strong performance. Risk appetite had returned to the market, however, meaning that the Euro remained an unappealing prospect.
The European Central Bank (ECB) is set to release its Economic Bulletin today, with the Eurozone consumer price index figures for May due out shortly after.
US Dollar
The US Dollar weakened yesterday on a market shift toward high-yielding assets and anticipation ahead of the latest monetary policy announcements. The Federal Open Market Committee (FOMC) decision had been an almost foregone conclusion, yet traders were still interested to hear what Janet Yellen had to say at last night’s press conference.
US consumer price index figures for May are due out tonight and are expected to show no change in non-core inflation and a small uptick in core price growth.
Canadian Dollar
A severe slump in crude oil prices saw the Canadian Dollar crumble yesterday. WTI dropped -1.5% while Brent fell -2.1%, with the day’s losses contributing to make the latest slide the longest in four months. In total, crude has fallen by over -5.3% in the past five days, with the latest losses due to an increase in US stockpiles, which rose by 1.16 million barrels over the last week. Goldman Sachs warned that the oil recovery is still fragile thanks to the return to the market of disrupted supplies and the continued global surplus.
There is little on the data calendar regarding Canada today, although the Bank of Canada’s (BOC) Governor Stephen Poloz is scheduled to give a speech and deliver a press conference in Whitehorse this morning.
New Zealand Dollar
The New Zealand Dollar was bullish yesterday, although it ticked lower against the Australian Dollar thanks to the return of risk appetite. The latest GlobalDairyTrade auction saw no change in the overall dairy price, although the whole milk powder sub-index fell -4.5%. In positive news, the annual Global Peace Index ranked New Zealand as the fourth safest country in the world; important news considering the huge impact tourism has upon the New Zealand economy.
New Zealand Gross Domestic Product figures for the first quarter of 2016 are expected to show that growth slowed on the quarter but rose on a year-on-year basis.
Data Released
June 16th 08.45 NZD Gross Domestic Product (YoY) (1Q) 2.6%
June 16th 09.40 CAD BOC’s Poloz gives speech, press conference in Whitehorse
June 16th 11.30 AUD Unemployment Rate (MAY) 5.7%
June 16th 11.30 AUD Employment Change (MAY) 15.0k
June 16th 18.00 EUR ECB Publishes Economic Bulletin
June 16th 21.00 GBP Bank of England Rate Decision (JUN 16) 0.50%
June 16th 22.30 USD Consumer Price Index (YoY) (MAY) 1.1%
June 16th 22.30 USD Consumer Price Index Ex Food & Energy (YoY) (MAY) 2.2%