Australian Dollar
Appetite for commodity currencies was weak yesterday, with a lack of any real impactful data pushing the Australian Dollar down versus a number of its peers. The Westpac leading index improved from -0.08% to -0.02%, but that still left it indicating a moderation of growth in the short-term. Skilled vacancies grew 1.2% after April’s 0.9% increase. Crude oil was continuing to slump and was beginning to affect investor sentiment across the globe.
Sterling
AUD/GBP may have advanced early on, with the Pound left unappealing as markets awaited the Queen’s Speech from Theresa May. However, Sterling later charged upwards, rising around 0.7% against the Australian Dollar and by similar amounts versus its peers. The catalyst did not come from Westminster, but from Yorkshire – where Bank of England (BoE) Chief Economist Andy Haldane was giving a speech. Haldane is notoriously dovish and yet suggested that interest rates may rise later this year. This has seriously shaken up the outlook on monetary policy for the UK.
The Pound might be a little bit busy today reacting to Andy Haldane’s hawkishness, but if volatility has died down, Sterling could react to the CBI trends total orders data. This will indicate if demand in the manufacturing sector is holding up.
Euro
The Euro was on mixed form yesterday, as a lack of domestic data and a greater focus on events elsewhere in the world gave markets little reason to buy into the common currency. EUR was also affected by the continued drop in crude oil, as this is likely to weaken core inflation figures – those that remove volatility energy, fuel and food prices – in the near-term. European Central Bank (ECB) President Mario Draghi has recently blamed volatility in the oil markets for strong inflation data, so now that the market is weakening he will have more justification for claiming that price growth isn’t consistent – and therefore doesn’t require monetary tightening to combat.
The ECB Economic Bulletin is set for release today.
US Dollar
The US Dollar was on lacklustre form yesterday. Like many of its peers, the ‘Greenback’ was also suffering from a sparse data calendar. Additionally, USD was also being weighed down by the cautious words of Federal Reserve official Robert Kaplan. The Federal Reserve Bank of Dallas President claimed that he was comfortable with where rates were now and that the Fed needed to be ‘very careful about how we remove accommodation’. Markets are still not confident that there will be another interest rate hike this year, with futures indicating a 53.2% chance of borrowing costs remaining the same.
It’s another thin data day today. If US initial jobless claims were to print above 300,000, economists would be worried, but that is highly unlikely to happen.
Canadian Dollar
The Canadian Dollar was falling thanks to oil market weakness yesterday, with WTI Crude trading below US$44 per barrel and Brent Crude stuck below US$46. Oil prices have now fallen by a fifth since the beginning of the year, making it the oil markets worst H1 performance since 1997.
Canadian retail sales figures will be released for April today; they’ll have to be particularly positive to distract from oil market volatility however. This doesn’t seem likely, as forecasts are for a slowdown in growth.
New Zealand Dollar
The recent fall in dairy prices, the bearishness of the crude oil markets and a lack of fresh domestic data all combined to keep the New Zealand Dollar on the decline against most of its peers yesterday. The ‘Kiwi’ did manage to outperform its commodity brethren, however.
The Reserve Bank of New Zealand (RBNZ) monetary policy decisions were announced this morning, so the ‘Kiwi’ is likely to spend the day reacting to those.
Data Released
June 22nd 07.00 NZD Reserve Bank of New Zealand Rate Decision (22 Jun) 1.75%
June 22nd 18.00 EUR ECB Publishes Economic Bulletin
June 22nd 20.00 GBP CBI Trends Total Orders (Jun) 7
June 22nd 22.30 USD Initial Jobless Claims (17 Jun) 240,000
June 22nd 22.30 CAD Retail Sales (MoM) (Apr) 0.2%