Australian Dollar
Iron ore prices remained strong on Tuesday, helping the Australian Dollar advance despite poor domestic news. Consumer confidence fell in the week ending August 7th, with the Roy Morgan Weekly Consumer Confidence Index dropping from 118.0 to 114.7. Business sentiment also fell, with the NAB Business Conditions index dropping from a downwardly-revised 11 to 8 and the Business Confidence index weakening from a downwardly-revised 5 to 4 in July. Chinese consumer price growth weakened as expected from 1.9% to 1.8%.
Australia is set to release consumer confidence data and home loans figures. There will also be a speech from Reserve Bank of Australia (RBA) Governor Glenn Stevens.
Sterling
A combination of poor data and dovishness from a Bank of England (BoE) policymaker allowed the Australian Dollar to trend bullishly against the Pound yesterday. While UK industry posted its strongest quarter since 1999, manufacturing production was weaker-than-expected. Instead of rising from -0.6% to -0.2%, monthly production declined by -0.3%, while yearly production dropped from 1.5% to 0.9% instead of 1.3%. Trade figures also disappointed, with the UK recording its worst trade in goods deficit on record in June as imports jumped. Exports did grow, however, but the trade deficit with the EU widened by £400 million over the last three months. Meanwhile, formerly hawkish BoE policymaker Ian McCafferty warned that further easing may be necessary if the UK economy weakens in line with forecasts.
No UK data will be released today.
Euro
Strong German trade data helped to keep the Euro advancing against the majority of its peers yesterday. While export growth disappointed, clocking in at 0.3% instead of the forecast 1.1%, the trade and current account balances greatly bettered expectations. The trade surplus increased from 21 billion to 24.9 billion, while the current account climbed from 18.4 billion to 26.3 billion; in both cases beating forecasts of 23 billion. Also boosting the Euro was news that the European Union would not be imposing fines on Spain and Portugal for breaching budget deficit targets. With Greece and Italy still proving problematic, the last thing investors wanted to see from the Eurozone was more tension.
There is no major Eurozone data set for release today.
US Dollar
The US Dollar was softened by a poor Non-Farm Productivity score for the second quarter yesterday, which printed at -0.5% instead of recovering from -0.6% to 0.4%. This continued the longest consecutive decline in productivity since the late 1970s, marking the third consecutive quarter in which productivity dropped. It is only the sixth time since 1982 that productivity has fallen year-over-year. Productivity is used to indicate the likely forward curve of worker pay and economic growth, providing clear signals on the likelihood of stronger inflation. Janet Yellen, Chair of the Federal Reserve, had previously referred to the future of productivity growth as ‘[a] key uncertainty for the US economy.’
MBA Mortgage Application figures up until the 5th of August may cause some US Dollar movement.
Canadian Dollar
The Canadian Dollar was mixed yesterday, with polarising forces keeping the oil markets in an unstable uptrend. Ongoing concerns over the level of US crude inventories was lessened by forecasts of a decline in stockpiles and suggestions that producers may work to cap production in order to boost prices. Markets were taking the latter with a large pinch of salt however, after several months of hoping for production cuts that never materialised. WTI traded around US$43.50 per barrel, while Brent trended in the region of US$45.60; good figures compared to the past few days, but poor when compared to recent highs. Canadian data helped give the ‘Loonie’ a boost, as housing starts in July weakened less-than-expected from 218k to 198k instead of 191k.
There is no Canadian data set for release today.
New Zealand Dollar
Like the Canadian Dollar, the New Zealand Dollar was on mixed form yesterday. The ‘Kiwi’ strengthened against the weaker currencies, including the Pound and the US Dollar, but weakened against the majors with decent momentum behind them. Overall this pointed to a continued softness in the New Zealand Dollar, attributable to market expectations of a rate cut in Thursday’s policy meeting.
REINZ House Sales figures for July are set for release soon.
Data Released
August 10th 08.00 NZD REINZ House Sales (YoY) (JUL)
August 10th 10.30 AUD Westpac Consumer Confidence (AUG)
August 10th 13.05 AUD RBA Governor Stevens Speech in Sydney
August 10th 21.00 USD MBA Mortgage Applications (AUG 5)