Australian Dollar
A solid increase in the HIA new home sales data pointed towards a state of continued heat in the Australian housing market. Even so, the mood towards the ‘Aussie’ remained generally positive as copper prices continued to perform well. The Australian Dollar also benefitted from the weakness of the US Dollar as investors sought out higher-yielding assets as the odds of imminent action from the Federal Reserve diminished.
With May’s private sector credit figures forecast to show an uptick on the year AUD exchange rates could remain on an uptrend today.
Sterling
Investors have remained convinced that Bank of England (BoE) Governor Mark Carney’s recent comments have opened the door for interest rates to rise in the near future. An unexpected increase in both net consumer credit and mortgage approvals in May boosted the appeal of the Pound further. However, while these stronger figures signalled that consumer spending remains resilient the BoE only recently expressed concerns over high levels of household borrowing. As long as the odds of an imminent rate hike remain strong, though, Sterling is likely to stay on a stronger footing.
However, a disappointing showing from the GfK consumer confidence survey could put renewed downside pressure on the Pound this morning.
Euro
Despite warnings that the European Central Bank (ECB) is not likely to tighten monetary policy in the near future the single currency saw fresh gains on Thursday. Confidence was buoyed by a better-than-expected German consumer price index report, which showed a surprise uptick on the year. Coupled with a strong rebound in inflationary pressure on the month this fuelled hopes that the ECB will continue to move away from its dovish attitude.
A similar upside surprise from June’s Eurozone inflation data could strengthen this latest Euro rally further, increasing bets of the ECB beginning to taper its quantitative easing program sooner rather than later.
US Dollar
An unexpected upward revision to the first quarter US gross domestic product failed to improve the mood of markets, given that it still reflected a sharp slowdown at the start of the year. This left the US Dollar on a weaker footing, especially as the latest jobless claims figures also proved disappointing. With confidence in the underlying strength of the world’s largest economy somewhat dented the appeal of the ‘Greenback’ remained limited.
If May’s personal consumption expenditure report shows a dip in inflationary pressure USD exchange rates are likely to extend their losses ahead of the weekend.
Canadian Dollar
While the relative confidence of the Bank of Canada (BOC) saw markets pricing in higher odds of an imminent interest rate hike the Canadian Dollar struggled to maintain its bullish momentum. As the latest US crude inventories showed an unexpected increase on the week the price of oil came under renewed pressure. This diminished the appeal of the commodity-correlated ‘Loonie’, pushing it lower against many of the majors overnight.
Greater volatility is likely ahead of tonight’s Canadian gross domestic product report, particularly if growth is found to have slowed in April.
New Zealand Dollar
Although the ANZ activity outlook index showed a solid uptick on the month this was not enough to shore up demand for the ‘Kiwi’. Traders continued to sell out of the New Zealand Dollar in a fresh round of profit taking, capitalising on its recent highs against rivals. With the upside potential of the antipodean currency limited, given the current outlook of the Reserve Bank of New Zealand (RBNZ) there was little reason to favour it on Thursday.
The mood towards the ‘Kiwi’ is likely to remain bearish ahead of the weekend, barring a strong upside surprise in the latest building permits figure.
Data Released
June 30th 08:45 NZD Building Permits (MoM) (MAY)
June 30th 09:01 GBP GfK Consumer Confidence Survey (JUN) -7
June 30th 11:30 AUD Private Sector Credit (YoY) (MAY) 5.0%
June 30th 17:55 EUR German Unemployment Rate (JUN) 5.7%
June 30th 19:00 EUR Eurozone Consumer Price Index (YoY) (JUN) 1.2%
June 30th 22:30 CAD Gross Domestic Product (YoY) (APR) 3.4%
June 30th 22:30 USD Personal Consumption Expenditure Core (YoY) (MAY) 1.4%