Australian Dollar
Trader confidence in a ‘Remain’ vote being the result of today’s UK referendum caused an increase in risk-appetite yesterday, boosting the Australian Dollar. Global stocks were on the rise, as were oil and commodities, with markets overall expecting the UK will reject a ‘Brexit’. The ‘Aussie’ was also boosted by positive domestic data. The Westpac leading index printed at 0.21% month-on-month in May, although the previous figure was revised down to 0.14%. Skilled vacancies growth accelerated on the month from 0.8% to 1%.
Referendum day is upon us, so the markets won’t be left wanting for the lack of Australian data on the calendar.
Sterling
The markets may have been confident in a stability-friendly referendum outcome yesterday, but the polls were less clear. Pound Sterling slumped against the Australian Dollar thanks to the latest contradictory findings, with one survey giving ‘Leave’ a one-point lead and the other reversing the trend. Campaigning activity was turned up to eleven, with both sides on the charm offensive. David Cameron levelled his strongest criticism yet of his Tory party colleagues, calling the idea of Friday being ‘Independence Day’ nonsense, while accusing Michael Gove of having ‘lost’ it after the ‘Leave’ campaigner claimed the recent string of economists to warn against a ‘Brexit’ were akin to Nazi propaganda levelled at Albert Einstein.
Unsurprisingly, there is no UK data today, as global focus will be on the country heading to the polls.
Euro
Britons weren’t quite so assured in the outcome of today’s referendum vote as the markets yesterday, with the Euro experiencing a surge as concerned voters rushed to get their holiday money. News that the European Central Bank (ECB) intends to reinstate Greece’s access to cheap funding operations within the next few days also cheered investors. Greece currently has to borrow funds from the ECB’s Emergency Liquidity Assistance (ELA), which charges interest at a rate of between 100-150%.
There is a run of French, German and Eurozone-wide PMIs set for release today, but the odds are that these will be ignored.
US Dollar
Safe-haven demand was muted yesterday, causing the US Dollar to slump. The depreciation was aided by economic news, with the annual International Monetary Fund (IMF) forecast issuing some dovish warnings on the state of the US economy. While the Fund stated that the US economy was in ‘good shape’, it cut its growth forecast for 2016 to 2.2% and suggested that the US Dollar would be 10-20% overvalued by 2020, when the current account deficit would exceed 4% of GDP.
Labour market data is set for release today; if last week’s poor CPI didn’t have an immediate effect due to ‘Brexit’ fears, there is little chance these figures will move the ‘Greenback’.
Canadian Dollar
The Canadian Dollar slumped yesterday despite rising commodities and strong domestic data. Crude oil was largely up, with Brent and WTI remaining above US$50 per barrel. Canadian retail sales figures for April saw larger growth than expected, rising 0.9% month-on-month, while the previous month’s decline was revised lower. Sales less autos for April saw a strong acceleration, growing 1.3% instead of the 0.6% forecast.
Canada’s data docket is completely empty today, so even the more ‘Brexit’-insulated Canadian Dollar will find itself at the mercy of the UK referendum.
New Zealand Dollar
Risk-appetite saw the New Zealand Dollar making strong advances verses the majors yesterday, with particularly strong gains being recorded against the Canadian Dollar and the US Dollar. This was despite disappointing credit card spending figures. Spending stagnated on the month in May, while annualised spending dropped from 9.1% to 5.9%.
The fact that the New Zealand data calendar is completely empty today is unlikely to be noticed, with the ‘Kiwi’ set to experience plenty of movement in relation to market sentiment.
Data Released
June 23rd GBP UK-EU Referendum Vote (“Brexit” Vote)
June 23rd 17.30 EUR Markit/BME Germany Composite PMI (JUN P) 54.3
June 23rd 18.00 EUR Markit Eurozone Composite PMI (JUN P) 53
June 23rd 22.30 USD Initial Jobless Claims (JUN 18) 270k
June 23rd 22.30 USD Continuing Claims (JUN 11) 2144k