Australian Dollar
The Australian Dollar was supported by strong commodity prices yesterday. The Bloomberg Commodity Index was posting gains of 0.7%, reflecting strong market demand. Most importantly for Australia was the news that iron ore prices had ended last week at a two-week high of US$62.69 after gains of 1.8%. This marked a recovery of 4.2% on the multi-month low recorded towards the beginning of May, with the strength of the rally suggesting that further appreciation may be on the way.
The only Australian data set for release today is the ANZ Roy Morgan weekly consumer confidence index. A rise may bode well for the inflation outlook, giving the Australian Dollar a boost.
Sterling
The Australian Dollar was able to post strong gains against the Pound yesterday as political uncertainty in the UK grew more marked. A landslide victory for the Conservative Party was looking more unlikely after the latest polls showed its majority over Labour had halved to 9 points since the election was called. Theresa May was forced to perform an embarrassing U-turn over plans to change the way social care is funded, which would see many older people forced to pay for their care if they received it at home; a move that was quickly dubbed the ‘dementia tax’.
UK government borrowing figures will be published this evening. Considering forecasts are for the deficit to have almost doubled to over -£8 billion, Sterling could be in for a rough ride.
Euro
Despite a lack of domestic data, the Euro was on the rise yesterday. The outlook for the Eurozone economy brightened after the French and German Finance Ministers met to work on a pledge between the countries that would see economic co-operation intensified. The move was part of a deal suggested by Angela Merkel and Emmanuel Macron that would see the Eurozone’s two most powerful economies accelerating growth in the currency bloc. Meanwhile, Pierre Moscovici, the European Economic and Financial Affairs Commissioner, suggested that a deal to grant Greece debt relief was ‘possible’ and ‘near’.
A slew of Eurozone data is set for release today, including services, manufacturing and composite PMIs for France, Germany and the Eurozone.
US Dollar
Political concerns continued to weigh on the US Dollar yesterday. The ‘Greenback’ fell as markets continued to react to last week’s developments, even though President Trump was now in the Middle East on his first official overseas visit. Bets of an interest rate hike next month were still high, but markets were looking ahead and reassessing their hopes of economic stimulus in the near-term from Trump.
As well as speeches from the Fed’s Evans, Brainard and Kashkari today, the manufacturing, services and composite PMIs will also be released.
Canadian Dollar
With a Bank of Canada (BOC) monetary policy meeting on the way this week and little chance of an interest rate hike, investors were not inclined to buy into the Canadian Dollar yesterday. The ‘Loonie’ remained soft, even though the crude oil markets were witnessing gains of over 1% for Canada’s primary export.
The Canadian Dollar may find some support from today’s only domestic data, as it is expected that wholesale sales will have grown 1% in March.
New Zealand Dollar
The New Zealand Dollar was on bullish form yesterday, boosted by commodity prices and weakness in safer currencies. Additionally, it was reported that the government was set to unveil lower spending for the fiscal year to June 30th than expected.
Data Released
May 23rd 09.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (21 MAY)
May 23rd 18.00 EUR Markit Eurozone Composite PMI (MAY P) 56.6
May 23rd 18.30 GBP Public Sector Net Borrowing (Pounds) (APR) -£8.15b
May 23rd 22.30 CAD Wholesale Sales (MoM) (MAR)
May 23rd 23.45 USD Markit US Composite PMI (MAY P) 53.2