Australian Dollar
Yesterday’s release of the Reserve Bank of Australia (RBA) meeting minutes caused the Australian Dollar to slump. The account of the April 4th meeting revealed that the RBA remained concerned by the strength of the housing market and the weakness of the labour market. This puts them in a difficult position as, while a rate hike might help control house prices, it would have an adverse effect on households who took out finance to buy a property, as well as businesses looking to hire staff. Overall the minutes indicate future data will be important, creating the possibility of a return to an easing bias.
The Westpac Leading Index and the ANZ Roy Morgan weekly consumer confidence data will be released today.
Sterling
The Australian Dollar to Pound Sterling exchange rate tumbled over -1.6% yesterday after UK Prime Minister Theresa May surprised investors by calling a snap general election for June 8th. May had ruled out doing so on numerous occasions since becoming Prime Minister, but Sterling was quickly sent on a bullish charge across the board. Political analysts are largely expecting the Conservative Party will emerge on June the 9th still in power and with a stronger majority. While this makes the prospect of a ‘Hard Brexit’ more likely, traders reacted positively as political stability is highly supportive of the Pound.
Euro
The Euro was on mixed form yesterday, although in most cases the common currency was registering strong gains. This was partly due to the risk-aversion gripping the global markets thanks to building tensions surrounding North Korea, but subsiding concerns over the outcome of the French elections also supported EUR exchange rate strength. Polls had shown that Emmanuel Macron remains in the lead and that Jean-Luc Melenchon is trailing in fourth-place with 18% of voter support. This has softened fears that the strongly EU-critical Melenchon would make it through to the second round to face off against Marine Le Pen, leaving two candidates who both wanted to change or leave some part of the EU or Eurozone.
Finalised Eurozone consumer price index figures for March are the most high profile data release on a fairly sparse economic calendar today.
US Dollar
The US Dollar was largely on the decline yesterday, with markets facing a mixture of lacklustre data, shaken confidence in President Donald Trump and the rising military tensions surrounding the situation in North Korea. The latest housing market data was disappointing, although a better-than-expected number of building permits issued suggested April would be a better month. Meanwhile, the possibility that Trump may not deliver on his promises to stimulate the economy was dawning on markets. However, there were positive developments too; the Federal Reserve’s Esther George stated that it was ‘necessary’ for the central bank to continue to raising interest rates.
Canadian Dollar
Suggestions US crude oil production had increased again pushed the Canadian Dollar lower against most of its peers yesterday, although the Australian Dollar was so weak the ‘Loonie’ was able to remain in positive territory against it. Reports indicated that output from US shale oil was likely to hit a two-year high this month, with US producers upping activity to fill the gap created by OPEC’s production cuts. Oil prices weakened to an 11-day low, dragging the Canadian Dollar down.
There is no Canadian data set for release today, but the US crude oil inventories data set for release just after midnight tomorrow could cause volatility in the oil markets.
New Zealand Dollar
The New Zealand Dollar was largely bullish yesterday, even though investors across the globe were generally avoiding risk. Dairy prices rose 3.1% at the latest auction, marking the third consecutive event in which prices have increased. However, forecasts had pointed to an increase of between 5% and 6% – a fact which slightly took the shine off the latest rise. Additionally, investors were expecting tomorrow’s inflation data to show a strong acceleration in the pace of price growth on the quarter and the year. If forecasts are met, this could put pressure on the Reserve Bank of New Zealand (RBNZ) to hike interest rates before too long.
The New Zealand performance of services index for March is set for release today.
Data Released
April 19th 08.30 NZD Performance Services Index (MAR)
April 19th 10.30 AUD Westpac Leading Index (MoM) (MAR) 0.1%
April 19th 19.00 EUR Eurozone Consumer Price Index – Core (YoY) (MAR F) 0.7%
April 20th 00.30 USD DOE U.S. Crude Oil Inventories (APR 14) -1.5m