Australian Dollar
Yesterday saw the markets continue to grow more confident, with the post-‘Brexit’ panic subsiding further. This saw an increase in risk-appetite, boosting the Australian Dollar against the majority of its peers. However, the ‘Aussie’ could face headwinds in the future, with many analysts predicting the recent recovery is merely a ‘dead cat’ (temporary) bounce, with ‘Brexit’ promising plenty of economic uncertainty over the coming weeks, months, or even years. Expectations of a rate cut from the Reserve Bank of Australia (RBA) have increased, with some believing policymakers may even act at next Tuesday’s meeting to pre-empt ‘Brexit’-related weakness.
Australian private sector credit figures could move the ‘Aussie’ today if the markets remain calm, although with so many analysts warning the current recovery is temporary, we could well see a return to risk-aversion.
Sterling
Despite numerous dire warnings about the future of the UK economy during and after a ‘Brexit’, the Australian Dollar slumped against Pound Sterling as the UK unit recovered. Jean-Claude Junker, European Commission President, warned that the UK would not be able to access the single market without accepting free movement, adding his voice to those of Angela Merkel, Francois Hollande and Donald Tusk. Fitch and Pantheon Macroeconomics were among those predicting the UK economy would enter recession, while JP Morgan forecast a rate cut from the Bank of England (BoE) before the end of the year. The impact of these announcements may have been delayed, but they are likely to return to weigh on Sterling in the near future.
UK confidence and GDP data is due out today, but considering they depict an economic landscape that is shortly set to undergo significant change, the results may have little impact on the Pound.
Euro
The Euro was mixed yesterday. On the one hand, recovering market sentiment renewed confidence in the common currency, helping it to appreciate. However, the same confidence saw traders turning to more risky assets, such as the Australian Dollar, leaving the Euro lacklustre. Traders were calmed by comments from several apparent European Central Bank (ECB) insiders stating that the Governing Council was not intending to launch new stimulus in the wake of the ‘Brexit’ vote.
German unemployment statistics and Eurozone inflation data is set for release today. Ordinarily these reports would have a significant impact, but the measure of pre-‘Brexit’ employment and spending have been registered somewhat obsolete by the UK’s decision to leave the European Union. Even the usually highly-anticipated account of the European Central Bank (ECB) monetary policy meeting might not get as much attention as usual.
US Dollar
A return to high-yield assets saw the US Dollar fall, despite the recent positive domestic data. Consumer confidence shot up in June, rising from a downwardly revised 92.4 to 98, far above the forecast 93.5. As with many global data releases, however, the effect of this was muted due to the fact that it reflects a time where the world was largely confident a ‘Brexit’ wouldn’t occur. Personal consumption figures remained steady at 1.6% for the core index as expected.
Jobless claims and continuing claims figures are due out today, with both expected to show a slight worsening.
Canadian Dollar
Despite a strong recovery for crude oil, the Canadian Dollar slumped yesterday. WTI and Brent both made solid advances, with Brent ending the European session edging towards US$50 per barrel. The ‘Loonie’ recorded notable losses against its peers, with the exception of a small rise against the US Dollar.
Canadian Gross Domestic Product figures for April are due out today and are expected to show an end to contraction on the month and an acceleration in growth on the year. Given the Canadian Dollar’s relative isolation from ‘Brexit’ volatility, the ‘Loonie’ may actually respond to the data.
New Zealand Dollar
The New Zealand Dollar was bullish on strengthening risk appetite yesterday, although the outlook for the ‘Kiwi’ may see risks to the downside. Domestic shares strengthened, while bond yields dropped. Heightened expectations that the Reserve Bank of New Zealand (RBNZ) would be forced to cut interest rates in response to heightened ‘Brexit’ volatility didn’t have much effect on the ‘Kiwi’s progress.
New Zealand building permits figures are due out this morning, with the ANZ Activity Outlook and NBNZ Business Confidence indexes following shortly after.
Data Released
June 30th 08.45 NZD Building Permits (MoM) (MAY)
June 30th 09.05 GBP GfK Consumer Confidence Survey (JUN) -2
June 30th 11.30 AUD Private Sector Credit (YoY) (MAY) 6.7%
June 30th 17.55 EUR German Unemployment Rate s.a. (JUN) 6.1%
June 30th 18.30 GBP Gross Domestic Product (YoY) (1Q F) 2.0%
June 30th 19.00 EUR Eurozone Consumer Price Index Estimate (YoY) (JUN) 0.0%
June 30th 22.30 USD Initial Jobless Claims (JUN 25) 267k
June 30th 22.30 CAD Gross Domestic Product (YoY) (APR) 1.4%