Australian Dollar
The Australian Dollar was mostly weak yesterday, with the recent Reserve Bank of Australia (RBA) meeting minutes continuing to weigh on sentiment. Traders are expecting Wednesday’s inflation data to weaken on the year, which would pave the way for the RBA to cut interest rates below the current historic low of 1.75%. With no domestic data and commodity markets weakening, there was little to provide support for the ‘Aussie’ yesterday.
The only Australian data on the calendar today is the weekly update of the ANZ Roy Morgan Weekly Consumer Confidence Index for the seven day period ending the 24th of July.
Sterling
AUD/GBP had been slumped in negative territory towards the start of yesterday’s session, but the Pound’s fortunes were quickly reversed. The latest data, although usually low impact, ended up triggering a rapid Sterling sell-off after revealing a six-year low in business optimism. The Confederation of British Industry (CBI) Business Optimism index for July registered an enormous drop in optimism, with the index plunging from -5 to -47, against forecasts of a drop to -15. This was particularly concerning given the fact that this was a survey of businesses in the industrial sector, who should have been looking forward to increased export demand thanks to the currently weakened state of the Pound.
Today’s BBA Loans for House Purchase figure is expected to show a strong slowdown in the number of property loans taken out in June.
Euro
While UK business confidence may have crashed since the Brexit referendum, German business sentiment remains strong. The Euro was largely strong yesterday thanks to better-than-expected IFO survey results. The Current Assessment index rose against predictions of a fall to 114; ticking higher from 114.6 to 114.7. Outlook on the business climate marginally slipped from 108.7 to 108.3, staying well above the forecast 107.5, while the expectations index dipped from 103.1 to 102.2 instead of falling to 101.6.
No data for the Eurozone is scheduled for release today.
US Dollar
The US Dollar was mostly in positive territory yesterday, with recent strong domestic data beginning to raise hopes that the Federal Reserve might tighten monetary policy before the end of the year. The markets still aren’t expecting higher interest rates before 2017 but expectations have risen considerably of late, making it likely that the odds will favour at least one hike before or during the December policy meeting. Gold prices weakened as investors pulled back from the safe-haven asset in response to the upside risks to the US Dollar.
The US Dollar could find itself moved by housing market data or the preliminary Markit services and composite PMIs for July.
Canadian Dollar
The oil markets were languishing yesterday with WTI and Brent both continuing to post large declines. WTI fell towards US$43 per barrel, with the commodity now at an eleven-week low. Brent Crude reached a similar low as well, slipping below US$45 per barrel; over -US$7 less than the 8-month high reached in June. With no domestic data to provide support, the Canadian Dollar slumped.
No Canadian data is due to be released today.
New Zealand Dollar
There was little on the domestic calendar for New Zealand yesterday. With no support, the New Zealand Dollar slumped into negative territory, weakened by the softening commodity markets. Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler gave a speech to a private audience; lacking knowledge of his comments and assuming a dovish tone, investors turned to safe-haven government bonds, causing yields to edge marginally lower as prices rose.
The New Zealand trade balance figures for June are expected to show a weakening of exports and a more-than halving of the trade surplus, creating downside risks for the New Zealand Dollar.
Data Released
July 26th 08.45 NZD Trade Balance (New Zealand dollars) (JUN) 127m
July 26th 09.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (JUL 24)
July 26th 18.30 GBP BBA Loans for House Purchase (JUN) 39650
July 26th 23.45 USD Markit US Services PMI (JUL P) 52
July 26th 23.45 USD Markit US Composite PMI (JUL P)