Australian Dollar
A double-whammy of economic warnings caused the Australian Dollar to weaken yesterday. Reserve Bank of Australia (RBA) Governor Philip Lowe warned that political gridlock could weigh on the Australian economy, slowing growth despite its potential to accelerate. Additionally, ratings agency Moody’s cut the credit rating of twelve Australian banks – including big four ANZ, CBA, NAB and Westpac – after warning about the risks associated with the housing market.
The RBA releases the minutes from its June monetary policy meeting today, so there is the potential for significant ‘Aussie’ volatility if policymakers are signalling a change in tone.
Sterling
The Australian Dollar to Pound Sterling exchange rate slumped yesterday, although elsewhere GBP was on mixed form, registering small loses against some of its peers. Brexit negotiations had officially begun and traders were waiting for a press conference with the UK Secretary of State for Exiting the European Union David Davis and European Commission Chief Negotiator Michael Barnier to see if talks had started on a positive footing. Additionally, investors were busy wading through the history of new Monetary Policy Committee (MPC) member Silvana Tenreyro; a Professor at the London School of Economics.
The text of Mark Carney’s speech intended for delivery at the now-cancelled Mansion House event in London will be released this evening.
Euro
The Euro was on strong form yesterday, with the potential for the UK to seek a softer Brexit helping to settle some market concerns ahead of the beginning of official talks. The main driver of the Euro was the success of French President Emmanuel Macron and his allies during the weekend’s legislative elections. The President’s La République en Marche and its Democratic Movement allies secured 350 seats, firmly beating the 289 required for a majority.
There is little Eurozone data on the calendar today, with the Eurozone current account figures for April being the most important report.
US Dollar
Markets were awaiting speeches from Federal Reserve officials yesterday, with Charlies Evans, Stanley Fischer and Eric Rosengren scheduled to talk at separate events today and Robert Kaplan due to make a public appearance early tomorrow morning. Markets currently don’t expect another rate hike during 2017, even though the Federal Reserve was surprisingly hawkish at last week’s monetary policy meeting. However, the US Dollar was able to gain versus its peers after William Dudley warned that pausing the monetary tightening cycle now would be dangerous for the economy.
Canadian Dollar
There was no domestic data released by Canada yesterday and so the Canadian Dollar declined, even though oil prices were edging higher. WTI was within a few cents of breaking above the key US$45 per barrel mark; investors were waiting for that to happen before deciding whether this was a strong recovery or just a temporary bounce.
Wholesale sales data for April is the only Canadian data on the economic calendar for today.
New Zealand Dollar
The New Zealand Dollar was on soft form yesterday, although it managed to hold above opening levels. US Dollar strength was holding back further ‘Kiwi’ gains, but positive domestic data was providing some support. The Westpac NZ consumer confidence index for the second quarter rose from 111.9 to 113.4, while the performance of services index for May climbed from 53.2 to 58.8.
The results of the latest Global Dairy Trade auction will be announced today.
Data Released
June 20th 09.00 USD Fed’s Evans Speaks in New York
June 20th 11.30 AUD RBA June Rate Meeting Minutes
June 20th 17.30 GBP BOE’s Carney speaks at Mansion House event in London
June 20th 18.00 EUR Eurozone Current Account s.a. (Euros) (Apr) €43.6b
June 20th 22.30 CAD Wholesale Sales (MoM) (Apr) 0.6%
June 20th NZD Dairy Auction Whole Milk Powder MT (20 Jun)