Australian Dollar
The Australian Dollar was largely on the decline yesterday, although it was able to make strong gains against the Pound and the US Dollar. Investors spent the latter half of last week celebrating the country’s record economic growth, but analysis from the Australia Institute took the shine off the recent data. The country may be enjoying a world record for unbroken growth, but Australian workers are witnessing a record low share of it, according to the findings. This bodes ill for inflation forecasts, with under 10 cents of every AU$1 in new GDP during the first quarter going towards wages.
NAB business confidence figures for May could give the ‘Aussie’ some support today.
Sterling
AUD/GBP was able to make strong gains yesterday after credit ratings agencies warned that the outcome of the UK general election could have a negative effect on the nation’s rating. Britain lost its triple AAA rating after the vote for Brexit and Moody’s warned yesterday that the election result would raise national debt and complicate the Brexit talks even further. Standard & Poor’s also claimed that it was bad for growth. Theresa May was yet to secure an agreement with the DUP and many were claiming that to do so contravened the Good Friday Agreement and therefore threatened the peace process in Ireland.
Today’s inflation data might not have that much of an impact upon the Pound, because investors will want to see how the Bank of England (BoE) reacts to the election, rather than the data, during its monetary policy meeting on Thursday.
Euro
The Euro was largely on buoyant form yesterday, despite a lack of economic data to provide any new tailwinds. Demand for the common currency was rising as the US Dollar weakened ahead of this week’s monetary policy meeting. Additionally, it was widely believed that the UK’s disastrous general election result for the Conservative Party would force Theresa May to bow to political pressure and abandon her plans for a ‘Hard Brexit’. A softer form of separation, with the preservation of free-trade between the EU and the UK would be greatly beneficial to the Eurozone.
Today’s ZEW sentiment survey scores for Germany and the Eurozone could help prop up the Euro if they show improving confidence.
US Dollar
With only a few days left until the Federal Open Market Committee’s (FOMC) monetary policy meeting this week, markets were largely steering clear of the US Dollar yesterday. Odds of a rate hike were at 95.8%, but the real question is whether or not the FOMC will remain optimistic about the need for at least one more hike over the remainder of the year.
Canadian Dollar
The Canadian Dollar was supported higher by leaping crude oil prices yesterday. WTI was up 1.6% to US$46.58 and Brent had climbed 1.72% to US$48.98. There was no fresh news to have driven the oil markets higher, but the recent slump to around US$45 per barrel had created room for appreciation again. Investors were buying in quick before prices rose enough to trigger a sell-off, suggesting that the Canadian Dollar is unlikely to find long-term support from the oil markets.
New Zealand Dollar
The New Zealand Dollar was on poor form yesterday, with the exception of strong gains versus Pound Sterling. Markets were getting jittery ahead of Wednesday’s US FOMC meeting and the anticipated rate hike it is likely to bring with it. Domestic data was also disappointing; card spending on retail fell -0.4% on the month in May instead of slowing from 1.1% to 0.2% as expected. Overall card spending declined -0.2% after growing 0.5% in April.
Data Released
June 13th 18.30 AUD NAB Business Confidence (MAY) 10.3
June 13th 18.30 GBP Core Consumer Price Index (YoY) (MAY) 2.7%
June 13th 19.00 EUR German ZEW Survey (Economic Sentiment) (JUN) 21.5