Australian Dollar
Fears of an iron ore oversupply weighed on the Australian Dollar on Friday, causing the ‘Aussie’ to slump across the board. Stockpiles of the mineral in Chinese ports continue to remain around record highs, yet Chinese steel mills are seeing weaker demand and figures from Thursday show that exports of iron ore from Australia’s main terminal hit their highest level so far this year. Iron ore futures and shares in mining companies slid on the back of heightened fears, dragging the Australian Dollar down with them.
There is no tier-one Australian data on the calendar this week, but Wednesday’s Chinese consumer price index figures for April will be highly influential for the ‘Aussie’.
Sterling
Although there was no UK data released Friday, the AUD/GBP exchange rate weakened as the Pound advanced. Early results from the UK local council elections showed that the Conservative party had managed to take well over 100 seats from Labour, the Liberal Democrats and UKIP. This suggested the Tories would also receive a strong majority in the upcoming general election, which could make the Brexit process easier, as Theresa May won’t be under so much pressure to bow to the demands of the opposition.
The Bank of England (BoE) announces its latest monetary policy decisions on Thursday; a combination of strong recent PMIs and firming inflation could see the Monetary Policy Committee (MPC) becoming more hawkish in tone, which would undermine the AUD/GBP exchange rate further.
Euro
The Euro was on a mixed footing on Friday in anticipation of Sunday’s French Presidential Election. The latest polling data had suggested the second round would see Emmanuel Macron win with 62% of the ballots, after his support breifly dipped to around 58% following the first round results. PMI data was supportive overall. Even though the German construction index slowed, the sector still continued to expand at a solid pace. Meanwhile, the Eurozone retail PMI left contraction territory.
Preliminary first-quarter German GDP figures are set for release on Friday.
US Dollar
Above-forecast employment figures did little for the US Dollar on Friday, although it still managed to tease out gains versus several of its peers. While the non-farm payrolls report clocked in 26,000 above forecast in April, March’s figure was revised down by -19,000. The unemployment rate edged down to 4.4% instead of rising to 4.6% as predicted, but year-on-year hourly earnings weakened from 2.7% to 2.5%. Nevertheless, the odds of a rate hike in June rocketed to 100%.
US consumer price index figures for April are set for release on Friday. While this is not the primary measure used by the Federal Reserve to gauge inflation, the figures could still alter the odds of interest rates being hiked in June.
Canadian Dollar
The Canadian Dollar weakened on Friday after crude oil prices fell to the level they were at before OPEC announced its collaborative deal to cut production. Analysts believe that a combination of factors pointing to continued global oversupply forced the markets to capitulate; investors who had bought crude oil futures on the hope that prices would rise gave up and sold, realising their losses. Done on a mass scale, this significantly weakened demand for crude, which drove prices briefly below the key US$45 per barrel level. Labour market data further sapped appetite for the Canadian Dollar after figures showed employment rose by only 3,200 in April, compared to forecasts of 10,000.
There is no high-impact data on the calendar this week for Canada. All the releases due out cover the housing sector, with April’s housing starts figure being the first up for publication.
New Zealand Dollar
The latest Reserve Bank of New Zealand (RBNZ) two-year inflation expectation survey revealed that businesses were more upbeat about future consumer price growth. The New Zealand Dollar rose after the data revealed average expectations for inflation over the coming two years had risen from 1.92% to 2.17% – over the RBNZ’s target range.
The RBNZ announce their latest round of monetary policy decisions on Thursday. No changes
Data Released
May 8th 22.15 CAD Housing Starts (APR) 238,000
May 10th 11.30 CNY Consumer Price Index (YoY) (APR) 1.1%
May 11th 07.00 NZD Reserve Bank of New Zealand Rate Decision (MAY 11)
May 11th 21.00 GBP Bank of England Rate Decision (MAY 11) 0.25%
May 12th 16.00 EUR German Gross Domestic Product w.d.a. (YoY) (1Q P) 1.7%
May 12th 22.30 USD Consumer Price Index (YoY) (APR) 2.1%