Australian Dollar
Demand for risk was weak yesterday, leaving AUD slipping below opening levels against many of its peers. Although iron ore prices had inched up slightly, Chinese consumer price index figures revealed that the growth rate remained unchanged at 1.5%, against forecasts of an uptick to 1.6%. While not a major development, it nonetheless gave markets a reason to think twice about the ‘Aussie’.
It is not a packed week for Australian data, but the Westpac consumer confidence index release on Wednesday could move AUD if it changes the outlook upon inflation.
Sterling
AUD/GBP inched lower yesterday, although the Pound was on mixed form elsewhere. There was little in the news or on the data calendar to move GBP, leaving it reacting to strength or weakness in other currencies. The Pound was still suffering from the aftermath of last week’s disappointing economic data, which has lowered the chances of an interest rate hike from the Bank of England (BoE) anytime soon, therefore decreasing the appeal of Sterling.
Thursday sees the release of the latest Bank of England (BoE) Credit Conditions & Bank Liabilities Surveys.
Euro
The Euro was on strong form yesterday, although it lost out marginally against the US Dollar. Strong German data stoked appetite for EUR, after showing that the trade surplus grew from €18.1 billion to €22 billion; over €3 billion more than expected. This was because exports grew 1.4% month-on-month in May, compared to predictions of 0.3% growth, while imports grew 1.2%, also beating a forecast of 0.3%. Although the Eurozone Sentix investor confidence index for July unexpectedly slipped from 28.4 to 28.3, this was such a minor movement that it did not bother markets.
Eurozone industrial production figures for May, released on Wednesday, are one of few notable economic reports due from the currency bloc this week.
US Dollar
The US Dollar was largely able to record minor advances yesterday and a more substantial 0.3% gain against the Australian Dollar. There was no fresh economic data to improve sentiment, but USD was buoyed by the fact that odds of an interest rate hike have risen following Friday’s strong jobs data. Markets were expecting a 54.7% chance that the Federal Reserve would increase borrowing costs at least once before the end of the year.
Federal Reserve Chair Janet Yellen will make various appearances before government officials this week to discuss the Federal Reserve’s current mandate. These could have a significant impact upon the US Dollar.
Canadian Dollar
Further drops in the price of crude oil pushed the Canadian Dollar marginally below opening levels yesterday. Rising drilling activity in the US threatened to continue adding to the glut already smothering the markets, leaving the outlook for ‘black gold’ looking less-than-rosy. However, losses were more-or-less contained by news that OPEC may consider expanding its oil production cap to include Libya and Nigeria.
The Bank of Canada (BOC) will meet to set interest rates on Thursday. Following the recent upbeat tone taken by the bank, economists are now expecting that borrowing costs will be increased from 0.5% to 0.75%.
New Zealand Dollar
The New Zealand Dollar was largely above opening levels yesterday, but its performance was nothing to write home about. There was a lack of domestic data and the volatility on the oil markets was keeping global risk-appetite somewhat subdued.
There is little in the way of New Zealand data set for release over the coming days, with the most impactful being the Business NZ performance of manufacturing index.
Data Released
July 12th 10.30 AUD Westpac Consumer Confidence Change (JUL) -0.7%
July 12th 22.30 USD Fed Releases Chair Yellen’s testimony to Congress
July 12th 19.00 EUR Eurozone Industrial Production w.d.a. (YoY) (MAY) 3.6%
July 13th 00.00 CAD Bank of Canada Rate Decision (JUL 12) 0.75%
July 13th 18.30 GBP Bank of England Credit Conditions & Bank Liabilities Surveys
July 14th 08.30 NZD Business NZ Performance of Manufacturing Index (JUN)