Australian Dollar
The Australian Dollar slumped on Friday after a midday speech from Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle. The board member doused hopes that the RBA was planning on hiking interest rates soon by stating that there was no significance in the fact that policymakers discussed target interest rates of 3.5%. He further explained that the RBA would not be pushed into raising interest rates before it believed the domestic economy was ready for them, just because central banks overseas had begun hiking.
Wednesday is the busiest day for Australian data, thanks to the publication of second-quarter consumer price data and a scheduled speech from Reserve Bank of Australia (RBA) Governor Philip Lowe.
Sterling
AUD/GBP tumbled before the weekend, even though the Pound had to contend with some disappointing UK public borrowing figures. The government deficit was expected to shrink from -£6.39 billion to -£4.3 billion, but instead only narrowed marginally to -£6.28 billion. This means that the government has borrowed around £2 billion more this fiscal year so far than by the same point in the previous fiscal year. However, the Pound seemed largely impervious to this, partly because last year’s borrowing figures were recently revised lower, so overall the deficit remains in better shape than expected.
Key UK data is set for release on Wednesday; the first estimate of second-quarter GDP. The economy is expected to have rebounded after the first-quarter slowdown; but by how much?
Euro
The Euro was on decidedly mixed form on Friday, as markets became divided on whether the recent rally was overdone. Thanks to comments on Thursday from European Central Bank (ECB) President Mario Draghi that discussions over QE and interest rate adjustments may take place in autumn, the common currency had surged to multi-month highs versus many of its peers. But on Friday analysts were arguing over the likelihood this actually meant any changes to monetary policy. The ECB also released its latest Survey of Professional Forecasters, with the results suggesting the Eurozone is set to continue with its current trend of strong growth but weak inflation.
Markets will have to wait until the end of the week for the most influential Eurozone data. Preliminary German consumer price index figures are scheduled for release. Will they give the markets a reason to push the Euro higher?
US Dollar
There was no US data released on Friday and, with odds of an interest rate hike below 50%, there was little reason for markets to buy into the US Dollar.
The Federal Open Market Committee (FOMC) will announce its latest monetary policy decisions early on Thursday morning. The markets currently have odds of 96.9% on a rate freeze.
Canadian Dollar
The Canadian Dollar managed to post strong gains versus many of its peers on Friday, despite a slowdown in inflation during June. Price growth fell from 1.3% to 1.0% last month, but economists had already predicted this, so markets were prepared for the worst. On the month, price growth met expectations of a -0.1% decline. Retail sales figures proved much better than anticipated, however. Sales grew 0.6% in May – just -0.1% lower than in April and 0.4% higher than forecast. This helped keep CAD on the rise, even though the oil markets were also experiencing a sell off.
The only impactful data on the Canadian economic calendar will be Friday’s GDP figures for May.
New Zealand Dollar
With markets uncertain about the globe’s safer currencies and the Australian Dollar undermined by a swift re-evaluation of rate hike odds, the New Zealand Dollar was the risk asset of choice on Friday. Strong card spending figures also helped, showing a year-on-year rise of 8.3% – a notable pick up on May’s 7.6% increase.
Wednesday’s trade balance figures for June are the most influential New Zealand data of the week.
Data Released
July 26th 08.45 NZD Trade Balance (New Zealand Dollars) (Jun)
July 26th 13.05 AUD RBA’s Lowe Speech in Sydney
July 26th 18.30 GBP Gross Domestic Product (QoQ) (2Q A) 0.3%
July 27th 04.00 USD Federal Open Market Committee Rate Decision (Jul 26) 1.25%
July 28th 22.00 EUR German Consumer Price Index (YoY) (Jul P) 1.5%
July 28th 22.30 CAD Gross Domestic Product (YoY) (May)