Australian Dollar
A bullish Japanese Yen caused significant demand for safe-haven assets yesterday, pushing the Australian Dollar deep into negative territory as a result. The Bank of Japan (BOJ) unexpectedly chose not to increase stimulus measures at the latest policy meeting. Positive Australian labour market data was largely overlooked. The unemployment rate held steady, but the employment change figure showed that an above-forecast 17.9k new jobs had been created.
There is no Australian data set for release today but after today’s massive appreciation, the Japanese Yen could fall markedly on correctional trading, which may create a window of risk opportunity that allows the Australian Dollar to make a strong recovery.
Sterling
The Australian Dollar slumped against Pound Sterling yesterday despite the increasingly bitter nature of the UK’s referendum debate. The Bank of England (BoE) became embroiled before the monetary policy decision had even been announced after several Conservative ‘Brexit’ backers criticised attacked the BoE for bias and scaremongering. Mark Carney hit back with a robust defence of the accusations, while the meeting minutes following the vote for a rate freeze showed that policymakers were unconcerned by the objections of the ‘Leave’ crowd, giving several predictions for a post-‘Brexit’ UK economy. Retail sales posted strong growth, helping to keep the ‘Aussie’ weak. Referendum campaigning for the day came to a premature conclusion after the main parties suspended activity as a sign of respect following the shooting of Labour MP Jo Cox, who was left in a critical condition after the attack.
There is no UK data set for release today, but doubtless the referendum will generate some news that causes significant movement for Pound Sterling.
Euro
Safe-haven demand wasn’t enough to keep the Euro in positive territory, with the focus largely on the Japanese Yen yesterday. The closeness of the UK’s referendum also continued to weigh on the common currency, although Jeroen Dijsselbloem attempted to dispel some of the panic. Speaking on the idea that Eurozone monetary policy might need adapting in the event of a ‘Brexit’, Dijsselbloem said ‘Do we need to change our policies in the fields of financial stability or fiscal policy, etc — no.’ Eurozone consumer prices may have grown faster-than-expected in May at 0.4%, but on the year prices remained in deflation.
Only low-impact figures for the Eurozone are due out today, with the Eurozone current account balance for April and first quarter labour costs set for release. The ECB’s Benoit Coeure is due to speak in Berlin.
US Dollar
Safe-haven demand saw the US Dollar trending bullishly yesterday, despite disappointing consumer price index results. With the Yen appreciation plateauing, investors shifted their focus to other secure assets like the ‘Greenback’, with market sentiment overpowering the negative headwinds from the latest inflation data. Non-core consumer price growth unexpectedly dropped on the year and edged lower on the month, which will dampen hopes of a US rate hike.
US housing starts and building permits reports are due today; the former is forecast to show a -1.9% decline, while the latter is expected to show growth of 1.3% after the previous month’s 4.9%.
Canadian Dollar
The crude oil slide continued yesterday, with both WTI and Brent posting losses in excess of -2.3%. The Canadian Dollar was mostly weak, although it advanced on the tumbling Australian Dollar. Governor of the Bank of Canada (BOC) Stephen Poloz provided some support after offering a generally upbeat assessment of the Canadian economy, suggesting that while there were headwinds, the country was on track and weathering the downside risks of weak commodity prices and low inflation.
Canadian inflation data could provide significant volatility for the Canadian Dollar today, with monthly growth expected to accelerate and yearly growth expected to tick lower for both the core and non-core indexes.
New Zealand Dollar
Strong first quarter GDP figures helped curb New Zealand Dollar losses caused by floundering risk appetite yesterday, although the ‘Kiwi’ still trended negatively overall. First quarter GDP slowed from 0.9% during the last three months of 2015 to 0.7%, although this was 0.2% higher than forecasts. Year-on-year growth accelerated from 2.3% to 2.8%, eclipsing predictions of 2.6%.
The Business NZ Performance of Manufacturing Index for May is due for release this morning. The index currently shows strong growth levels; any signs of a slowdown could weaken the ‘Kiwi’.
Data Released
June 17th 08.30 NZD Business NZ Performance of Manufacturing Index (MAY)
June 17th 21.45 EUR ECB Executive Board Member Benoit Coeure Speaks in Berlin
June 17th 22.30 USD Housing Starts (MoM) (MAY) -1.9%
June 17th 22.30 USD Building Permits (MoM) (MAY) 1.3%
June 17th 22.30 CAD Consumer Price Index (YoY) (MAY) 1.6%
June 17th 22.30 CAD Bank Canada Consumer Price Index Core (YoY) (MAY) 2.1%