Australian Dollar
The Australian Dollar was on weak form yesterday, with its ‘best’ performances being a hold around opening levels against the Pound. The crude oil markets remained in weak position, even if oil prices were beginning to edge up from recent lows, worrying investors across the globe and keeping a lid on risk appetite.
Sterling
The AUD/GBP exchange rate was making minor gains yesterday as the Pound softened across the board. Positive data from the Confederation of British Industry (CBI) did nothing to help Sterling, despite showing factory orders were at a 29-year high. Markets weren’t too influenced by the figures, as survey data in recent months has tended to suggest a much stronger economy than official ‘hard’ data has later detailed. Additionally, markets were awaiting news from Theresa May’s trip to Brussels, in which she was expected to outline her offer on the rights of the 3 million EU citizens already living in the UK at an official dinner.
Euro
Crude oil weakness continued to weigh on the Euro yesterday, as falling energy prices bode ill for upcoming inflation data. The latest Economic Bulletin from the European Central Bank (ECB) also failed to stoke demand for the common currency. Although it revealed that growth was accelerating at a faster-than-expected pace, the bulletin also claimed that there was still little sign that this was translating into price pressures. Despite discussing the removal of references to lower interest rates in future, the bulletin concluded that loose monetary stimulus would remain necessary.
There are several Eurozone releases due out today. Markit’s Eurozone composite PMI will give a good indication of how the currency bloc’s biggest economies performed overall, which will help economists gauge whether second-quarter growth is likely to have trended higher or lower than that of the first quarter.
US Dollar
The US Dollar was on mixed form yesterday, thanks to a lack of impactful data. Odds of an interest rate hike this year from the Federal Reserve were inching higher, but for the moment the market consensus remains – just barely – that borrowing costs will be left untouched until 2018. Initial and continuing jobless claims figures clocked in ever-so-slightly higher than forecast, but still comfortably below the threshold at which economists would start to worry.
Markit PMIs for the US are due out late tonight.
Canadian Dollar
Strong retail sales figures boosted the Canadian Dollar yesterday. Expected to grow 0.3% month-on-month during April, sales instead climbed 0.8%. Sales excluding autos grew 1.5% instead of 0.7%, while March’s decline was revised up to just -0.1%. The Canadian Dollar also benefitted from the fact that crude oil prices had started to rebound, even if they are doing so from a severely-weakened state.
Inflation data for May is set for release today.
New Zealand Dollar
The Reserve Bank of New Zealand (RBNZ) kept interest rates frozen at their record low of 1.75% yesterday, continuing to hold the view that borrowing costs won’t rise until 2019. This somewhat surprised markets, as inflation has risen into the middle of the RBNZ’s 1-3% target range. However, the New Zealand Dollar was able to make firm gains yesterday as RBNZ Governor Graeme Wheeler used softer-than-expected rhetoric to describe strong NZD exchange rates. It was thought Wheeler would explicitly state that that the currency was too strong and that this was harming the economy, in an attempt to jawbone it lower. That he didn’t suggests the RBNZ doesn’t believe NZD is currently too strong, increasing demand for the ‘Kiwi’ as it doesn’t look like policymakers will take measures to weaken exchange rates any time soon.
Data Released
June 23rd 18.00 EUR Markit Eurozone Composite PMI (Jun P) 56.6
June 23rd 22.30 CAD Consumer Price Index (YoY) (May) 1.5%
June 23rd 23.45 USD Markit US Composite PMI (Jun P) 53.8