Australian Dollar
The Australian Dollar was able to trend bullishly on Friday after the latest US Non-Farm Payroll figures. The somewhat mixed result failed to tip the US Dollar into the kind of bullish recovery that would have been expected given the impressive headline figure. Asian stock markets had closed in the red, but European markets were making strong gains while commodities advanced, signalling that risk-appetite was well established. A general consensus that the Coalition would be able to form a government with Prime Minister Malcolm Turnbull still in charge helped abate any investor fears. There was no Australian data to provide support, but the ‘Aussie’ clearly didn’t need it.
The key Australian releases this week will be Thursday’s employment change and unemployment rate reports.
Sterling
Strong trade figures on Friday helped the Pound limit AUD/GBP gains, while Sterling strengthened against most of the majors. Not only did May’s trade deficits widen by less-than-expected, the previous month’s deficits were also revised lower. Even a special post-referendum consumer confidence survey from GfK, which showed the largest drop in sentiment in 21 years, failed to particularly hamper the Pound.
All eyes will be focussed on Thursday this week, when the Bank of England’s (BoE) Monetary Policy Committee (MPC) will meet to decide monetary policy. Markets widely expect a cut, with the most dovish forecasters predicting the Committee will slash rates to 0.00%. Some analysts suggest the MPC may even choose to restart the quantitative easing programme.
Euro
Euro losses only worsened on Friday as the session progressed. The common currency started in a weak position after German trade data disappointed predictions. The German trade surplus shrank by more-than-expected in May, dropping from €25.7 billion to €21 billion, dashing forecasts of a small decline to €23.5 billion. Imports rose just 0.1%, but a -1.8% seasonally adjusted fall in exports shocked the market; an acceleration in growth from 0.1% to 0.4% had been predicted. Euro investors were disappointed by the US NFP result, weakening the Euro despite the inverse correlation between the two currencies. This was because the European Central Bank (ECB) is partly relying on an interest rate hike in the US to help weaken the Euro and boost inflation; the latest US jobs figures will have done nothing to improve prospects of that.
Eurozone data is relatively thin on the ground this week, but Friday’s ECB Survey of Professional Forecasters is likely to garner considerable interest.
US Dollar
The US Dollar remained weak yesterday after a mixed Non-Farm Payroll figure left markets without clear direction. After last month’s shocking NFP, which clocked in at under a quarter of the predicted 160k job growth, investors were keenly focussing on Friday’s report. The headline figure was impressive, but the result was not without its caveats. The results for June easily smashed forecasts, showing job creation of 287k, compared to the forecast 180k. However, the previous month’s already dire figure was revised even lower to a meagre 11k, while a rise in the number of people looking for work meant that unemployment rose further-than-expected, hitting 4.9%. The US Dollar remained weak, therefore, due to the fact that even with last month’s surge of growth, job creation in the last two months still averages out below trend.
Friday will be the biggest day in terms of US Dollar volatility, with the advance retail sales figure and consumer price indices all due out at the same time.
Canadian Dollar
Poor jobs data also weakened the Canadian Dollar on Friday. On the face of it, Canada’s labour market was strong, with unemployment dropping against predictions from 6.9% to 6.8%, rather than rising to 7%. However, this was attributable to a small dip in the number of people actively looking for work, with the participation rate slipping from 65.7 to 65.5. The full time change in employment index dropped from 60.5 to -40.1, while the part time index showed an almost mirrored performance, rising from -46.8 to 39.4. The net change in employment figure was -0.7k – an increase in employment of 6.5k had been predicted.
The Bank of Canada (BOC) makes its next interest rate decision on Thursday. No change is currently forecast, so investors will be more interested in the companying Monetary Policy Report.
New Zealand Dollar
The New Zealand Dollar was able to trend bullishly against its peers on Friday following the overall disappointment of the US data. Risk-appetite was firmly on, with stocks doing well; the US Dow Jones index opened up 0.7% during the European session to recover all of the losses experienced since the UK’s vote for ‘Brexit’ shocked the markets.
This week is a quiet one for New Zealand data, with today’s card spending retail figures one of the few releases on the economic calendar.
Data Released
July 11th 08.45 NZD Card Spending Retail (MoM) (JUN)
July 14th 00.00 CAD Bank of Canada Rate Decision (JUL 13) 0.50%
July 14th 00.00 CAD Bank of Canada Releases Monetary Policy Report
July 14th 11.30 AUD Employment Change (JUN)
July 14th 11.30 AUD Unemployment rate
July 14th 22.30 GBP Bank of England Rate Decision (JUL 14)
July 14th 22.30 GBP BOE Asset Purchase Target (JUL)
July 15th 22.30 USD Advance Retail Sales (JUN)
July 15th 22.30 USD Consumer Price Index (YoY) (JUN)