Australian Dollar
The Australian Dollar was on mixed form yesterday. Markets had been waiting for the key US releases, but in the end the figures did little to change the outlook on a rate hike in June, so there was no reason to alter positions on the ‘Aussie’. Domestic data was positive overall; consumer confidence rose last week, monthly building approvals grew faster-than-expected and the decline in yearly approvals slowed more-than-predicted. But Chinese iron ore futures continued to lose value, with the most actively traded on the Dalian Commodity Exchange now down -28% in total since the middle of March.
Although there is some Australian data set for release today, the biggest influence on the Australian Dollar will be the Chinese manufacturing PMI for May.
Sterling
AUD/GBP exchange rates slipped yesterday, even though there was nothing in the way of news or data to support the Pound. However, Sterling ended last week at multi-week – or even multi-month – lows against many of its peers, which was making it an attractive buy for investors who believe it has been oversold. This drove GBP higher, even if the continued political jitters and presence of some important data this week are keeping the outlook cloudy.
AUD/GBP may be able to recover ground today thanks to forecasts for the GfK UK consumer confidence survey, which expect to see sentiment weaken from -7 to -8.
Euro
The Euro was largely advancing yesterday, although gains were somewhat limited by disappointing data and concerns over the Greek bailout. While French GDP clocked in above-forecast, German important prices and Eurozone confidence figures were all worse-than-predicted. Preliminary German consumer price figures were the most disappointing, weakening below forecast to show a -0.2% decline on the month in May and 1.5% growth year-on-year, against predictions of 1.6%. Meanwhile, rumours – quickly denied by Athens – suggested that the Greek government could even forgo the next tranche of bailout payments unless its creditors agreed a deal on debt relief.
There are several pieces of key data likely to generate Euro movement today, including German unemployment figures and Eurozone consumer price index figures, all covering May.
US Dollar
The US Dollar remained on the decline yesterday despite the day’s headline data printing in-line with forecasts; all it needed to do in order to keep the Federal Reserve appeased and a hike in June likely. Personal consumption expenditure grew at 0.2% on the month, which was ten basis points better than forecast, while year-on-year expenditure ticked down to 1.5%. According to the futures market, odds of an interest rate hike are now 88.8%, but the currency markets have already mostly priced-in a rate hike, giving the US Dollar little room to advance further.
There is little on offer from the US today in terms of data, but Federal Reserve member Robert Kaplan will give a speech in New York. USD could react if he mentions monetary policy.
Canadian Dollar
The Canadian Dollar was largely on the decline yesterday, with bearishness in the oil markets prompting investors to sell the ‘Loonie’. Despite OPEC agreeing to extend the duration of its production cuts, analysts were worried that the global oversupply would continue. Resurging activity in the US oil sector is one of the key issues. Goldman Sachs is one of the institutions feeling pessimistic, yesterday releasing new forecasts for oil that cut projections for Brent Crude from US$56.76 to US$55.39 and WTI from US$54.80 to US$52.92.
Canadian GDP figures for March and the first quarter will be released today.
New Zealand Dollar
The New Zealand Dollar was largely on the rise yesterday, despite data showing building permits fell -7.6% in April on the month. However, a new statement from credit ratings agency Moody’s forecast that among the world economies with an AAA credit rating, New Zealand would be one of the fastest growing.
Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler will be attending a news conference and is likely to face questions about monetary policy.
Data Released
May 31st 09.00 NZD RBNZ’s Wheeler news conference on FSR
May 31st 09.01 GBP GfK Consumer Confidence Survey (MAY) -8
May 31st 11.00 CNY Manufacturing PMI (MAY) 51
May 31st 19.00 EUR Eurozone Consumer Price Index – Core (YoY) (MAY A) 1.1%
May 31st 22.00 USD Fed’s Kaplan Speaks in New York
May 31st 22.30 CAD Quarterly Gross Domestic Product Annualized (1Q) 0.8%