Australian Dollar
Another freeze on monetary policy from the Reserve Bank of Australia (RBA) pushed the Australian Dollar lower yesterday. Although the board downplayed the likelihood of a slowdown in GDP during the first quarter, analysts and investors were getting jittery ahead of today’s data. If the figures show growth, Australia will take the crown as the developed nation with the longest period of growth without a recession. Yesterday’s ecostats caused confidence to wobble after the current account balance for the first quarter was a deficit of -AU$3.1 billion, against forecasts of a narrowing from -AU$3.5 billion to -AU$0.5 billion.
Sterling
Despite its weakness, the AUD/GBP exchange rate was able to make small gains yesterday as general election jitters weighed on the Pound. The latest poll by Survation showed that the Conservatives held a lead over Labour of just one point, while the new YouGov seat-by-seat prediction suggested Theresa May’s party would come -22 seats short of a majority. Although there are still polls showing the Conservatives holding a strong lead, markets have been unsettled due to the fact they were initially expecting a landslide victory for the Prime Minister.
House price data is set for release today, but with it being election-eve it is virtually assured that the figures will be overlooked as political tensions grow.
Euro
The Euro was on soft form yesterday as markets searched for safer assets. As well as the UK general election and the US Senate Intelligence committee hearing, the Eurozone will also contribute its own risk event to the pile; the latest European Central Bank (ECB) policy meeting. Analysts are expecting the Governing Council to hint at a tapering of the quantitative easing programme, but a subsequent press conference with traditionally-dovish ECB President Mario Draghi threatens to see those hopes quickly extinguished.
There are several medium and low-impact releases due from Germany, France, Italy and the Eurozone as a whole today. The data docket opens with German factory orders for April.
US Dollar
With very little data on offer over the next few days, the US Dollar was on mixed form as markets nervously awaited Thursday’s US Senate hearing. James Comey, the former FBI Director who was unceremoniously fired by President Donald Trump recently, is due to testify on the investigations into potential interference in the Presidential Election last year by Russia. He is expected to testify that Trump tried to pressure him into dropping the investigation and could be a key turning point for the Republican administration that has been hounded by scandal since it took office.
Although MBA mortgage applications figures for the week ending June 2nd are released today, markets are unlikely to pay much attention given Comey’s upcoming testimonial to the Senate.
Canadian Dollar
The Canadian Dollar was on largely weak form yesterday, with the oil markets weakening despite the overall softness of the US Dollar. While crude oil had risen yesterday on the belief worsening diplomatic relations between the Gulf Cooperation Council (GCC) and Qatar would disrupt the latter’s oil exports, it was beginning to dawn that the withdrawal of Qatar’s relatively tiny contribution to the global oil supply wasn’t going to tackle the glut.
Building permits data for April is set for release tonight.
New Zealand Dollar
The New Zealand Dollar was on bullish form yesterday, buoyed by the weakness in the US Dollar. Dairy trade data also had a positive effect, although the results of the latest global auction were not as impressive as previous events. The average price rose 0.6% to US$3,395 – the worst rate of growth see in the fortnightly bidding since prices slumped in the first week of March. Still, another increase in prices was a welcome development and the ‘Kiwi’ was able to retain its strength.
The only New Zealand data on the calendar today is low impact, consisting of job advertisements for May and the first-quarter manufacturing activity report.
Data Released
June 7th 08.45 NZD Manufacturing Activity (1Q)
June 7th 11.30 AUD Gross Domestic Product (QoQ) (1Q) 0.3%
June 7th 16.00 EUR German Factory Orders n.s.a. (YoY) (APR) -0.4%
June 7th 21.00 USD MBA Mortgage Applications (JUN 02) 0.1%
June 7th 22.30 CAD Building Permits (MoM) (APR) 3.1%