Australian Dollar
Economic data yesterday was largely positive and so the Australian Dollar was able to record some minor advances. Although the ANZ Roy Morgan weekly consumer confidence index weakened from 114.5 to 113, the NAB business conditions index rose from 11 to 15; its highest level since 2008. The NAB business confidence index ticked higher by one point to 9 and the decline in investment lending slowed from -2.3% to -1.4%. While the value of loans for May rose 2.9%, home loan growth was slower at 1% than the 1.5% forecast; something of a relief as it suggests measures to curb risky lending are working.
The Westpac consumer confidence index for July will be the most influential Australian data release today.
Sterling
AUD/GBP had suffered some losses as markets eagerly awaited a speech from the Bank of England’s (BoE) Deputy Governor Ben Broadbent late yesterday. But following his address, the Pound quickly ceded its gains and the Australian Dollar was able to edge higher. Markets were so interested in Broadbent because he is the last member of the Monetary Policy Committee (MPC) to make public his views on the likelihood of an interest rate hike in the near-term. However, much to the disappointment of markets, this remains the case. Broadbent did not comment on interest rates and many have suggested this is because his views haven’t changed, so he is still dovish.
Today’s average weekly earnings figures for the three months to May will be watched closely. These will show how household budgets are likely to hold up as consumer prices continue to rise, therefore affecting the outlook on the spending-driven UK economy.
Euro
Domestic data was in short supply yesterday, but the Euro was able to climb against the majors. The data that was available showed that Italian industry had a positive month in May. Industrial production was expected to grow 0.5% on the month, but instead rose 0.7%. On the year this meant production was 2.8% higher, instead of the predicted 2.2%. Sentiment towards the common currency seemed impervious to the tensions resurfacing following Monday’s strong German trade surplus. This will have boosted the nation’s current account surplus, which many Eurozone officials argue should be invested to help generate domestic demand for imports from other members of the single currency.
It’s a quiet day for Eurozone data today, but the industrial production figures for May could cause some movement for the common currency.
US Dollar
Appetite for the US Dollar improved after comments from Federal Reserve official John Williams. The policymaker said that he still expects the Federal Open Market Committee (FOMC) will hike interest rates once more this year. He also expects the enormous US$4.5 trillion balance sheet unwinding will start at some point in the next few months. Williams claimed that the currently soft pace of inflation was transitory, although he cautioned that if inflation did not accelerate to meet expectations, this would justify a slower pace of monetary tightening.
Janet Yellen is appearing before US lawmakers several times this week in her capacity as Chair of the Federal Reserve. Her testimony to Congress will be released late tonight, so markets are likely to be in wait-and-see mode, which could keep the US Dollar sluggish.
Canadian Dollar
Canadian housing starts figures for June may have beaten forecasts, but the Canadian Dollar was largely weakening yesterday. Markets were beginning to get edgy ahead of the Bank of Canada’s (BOC) monetary policy meeting, the results of which will be announced at midnight on Thursday. The markets are strongly betting on an interest rate hike, so there is an incentive to stand pat on the ‘Loonie’ until the BOC’s decision has been made public.
The Canadian Dollar is likely to be stuck in limbo today, what with the BOC interest rate decision just around the corner.
New Zealand Dollar
Investors were unsettled by news of an earthquake 196km off New Zealand’s South Island yesterday, causing the New Zealand Dollar to slump. The earthquake, which the United States Geological Survey reported as having a magnitude of 6.8, did not immediately cause any casualties or fatalities, but observers are nonetheless cautious given the damage caused by the 7.8 Kaikoura quake in mid-November 2016. This weighed on sentiment and kept NZD on the decline.
The only New Zealand data set for release today is the ANZ truckometer heavy. If the large earthquake is found to have caused no, or minimal, damage, markets may turn their attention to this measure of haulage activity.
Data Released
July 12th 08.00 NZD ANZ Truckometer Heavy (MoM) (JUN)
July 12th 10.30 AUD Westpac Consumer Confidence Change (JUL) -0.7%
July 12th 18.30 GBP Weekly Earnings ex Bonus (3M/YoY) (MAY) 1.9%
July 12th 19.00 EUR Eurozone Industrial Production w.d.a. (YoY) (MAY) 3.6%
July 12th 22.30 USD Fed Releases Chair Yellen’s testimony to Congress
July 13th 00.00 CAD Bank of Canada Rate Decision (JUL 12) 0.75%