Australian Dollar
Despite a lack of economic data yesterday, the Australian Dollar was able to edge up against the major currencies. Increasing risk-sentiment, combined with headwinds for safer currencies like the US Dollar, Euro and Pound, helped increase appetite for the ‘Aussie’. AUD made an attractive buy for investors yesterday, given that it is currently trading around multi-month lows versus many of its peers.
Credit card purchases figures for March are the only Australian data releases on the economic calendar today, so AUD movement is likely to be dictated by the day’s headline US data.
Sterling
The Australian Dollar Pound Sterling exchange rate made bullish advances yesterday, after a run of negative economic developments weighed on GBP. Trade, industrial, manufacturing and construction production figures all disappointed forecasts for March, with February’s figures revised worse as well. Meanwhile, the Bank of England (BoE) voted to keep interest rates on hold, as expected. It also marginally lowered its growth forecast for 2017, while revising inflation expectations up.
After yesterday’s slew of economic data and Bank of England news, today sees nothing on the economic calendar from the UK, which could leave the Pound on rudderless form.
Euro
The European Central Bank (ECB) released its latest Economic Bulletin yesterday. Although the ECB admitted that the Eurozone’s economic recovery was strengthening, it also claimed there was not yet a ‘convincing upward trend’ in inflation. Additionally, the bulletin revealed that unemployment across the Eurozone was actually higher than official data indicates, explaining why wage growth remains sluggish. According to the bulletin, when adjusted to include people who do not meet the strict unemployment criteria and part-time workers looking for more hours, unemployment rises nearly six percentage points to 15%.
German first-quarter GDP estimates are set for release today and could boost the Euro if they show an acceleration in growth rates. This would put even more pressure on the ECB to start tightening monetary policy.
US Dollar
The US Dollar was on mixed form yesterday. The Federal Reserve’s William Dudley launched a staunch defence of globalisation, claiming that isolationism will fail; an unsettling claim considering President Donald Trump’s ‘Buy American, Hire American’ mantra. However, fellow Federal Reserve member Eric Rosengren offered positive comments on the monetary policy outlook after stating that he favoured three more interest rate hikes in 2017 to stop the economy from overheating. Additionally, the latest initial and continuing jobless claims figures printed lower-than-expected.
It could be a volatile evening for the US Dollar, given the upcoming release of April’s consumer price index and advance retail sales figures, while the latest University of Michigan consumer confidence figures will be released at midnight on Saturday.
Canadian Dollar
Despite sharp gains of around 1.3% for crude oil, the Canadian Dollar was largely on the decline yesterday. While there were suggestions that Iraq and Algeria supported Saudi Arabia’s goal of extending OPEC’s production cuts past its original deadline, data also showed that the Kingdom saw rising crude oil output in April. Additionally, credit ratings agency Moody’s downgraded the ratings for six Canadian banks and reaffirmed a negative outlook on future ratings changes, citing debt and house prices as causes for concern.
Only low impact data is set for release from Canada today; oil market developments are likely to have a bigger impact on the ‘Loonie’ than the Teranet/National Bank house price index for April.
New Zealand Dollar
The New Zealand Dollar was bullish yesterday, but only after slumping to multi-month lows on a surprisingly pessimistic outlook from the Reserve Bank of New Zealand (RBNZ). Markets had been expecting the RBNZ to become more upbeat and signal that a rate hike could happen sooner than currently expected. However, policymakers instead forecast that inflation would weaken and Governor Graeme Wheeler even left the door open to further rate cuts after commenting that ‘numerous uncertainties remain and policy may need to adjust accordingly’. The bank made no changes to its interest rate forecasts, with monetary tightening still not expected until towards the end of 2019.
The Business NZ performance of manufacturing index for April is set for release today.
Data Released
May 12th 08.30 NZD Business NZ Performance of Manufacturing Index (APR)
May 12th 11.30 AUD Credit Card Purchases (MAR)
May 12th 16.00 EUR German Gross Domestic Product n.s.a. (YoY) (1Q P) 2%
May 12th 22.30 CAD Teranet/National Bank HPI (YoY) (APR)
May 12th 22.30 USD Consumer Price Index (YoY) (APR) 2.3%