Australian Dollar
The Australian Dollar traded broadly higher on Friday’s session, catching tailwinds from renewed strength in the Chinese equity markets and a weaker US Dollar.
Both Hong Kong’s Hang Seng Index and the Shanghai Composite moved upwards, with Australian exports commodities of iron ore and copper trading higher.
On the data front, investors were disappointed to see that the Westpac leading index – a gauge of business sentiment – eased from 0.2% to -0.2% in May, missing the forecast of a 0.1% rise, though this did not prevent or waylay the ‘Aussie’ Dollar’s revival.
Today, there is very little going on in terms of Australian data, but investors will be keeping a close eye on the US-China trade negotiations, with any sign of escalation liable to put the ‘Aussie’ under pressure.
Sterling
Sterling traded slightly lower at the end of last week, falling despite market hopes for a Bank of England (BoE) rate rise in August this year.
This sell-off was largely driven by ongoing uncertainties regarding the Brexit negotiation process and demand for stronger evidence that the UK economy has in fact left its Q1 soft patch behind.
Looking ahead, investors will continue to weigh up progress (or a lack thereof) in Brexit talks and global trade tensions, with today’s sparse data calendar liable to leave the focus on politics and trade.
Euro
The Euro (EUR) received a well-needed shot in the arm on Friday, rising against the majors as investors responded to a raft of upbeat Eurozone PMI releases.
IHS Markit’s composite reading inched up from a score of 54.1 to 54.8, beating expectations of a fall to 53.9.
Looking at the broader picture, however; the Eurozone is effectively ending the first half of 2018 a lot worse than analysts had expected, with the Q1 slowdown extended and optimism notably reduced by the tariff exchange with the US.
Today, the German IFO survey results will be the primary drivers.
US Dollar
The US Dollar (USD) tumbled on Friday’s session, falling as investors responded to a weaker-than-expected round of PMI releases.
Markit’s composite reading for June fell from 56.6 to 56.0, whilst the manufacturing reading plummeted from 56.5 to 54.6 – a 19-month low.
This clear loss of momentum weighed on demand for the ‘Buck’, but its fall was ultimately limited thanks to the current hawkish stance of the US Federal Reserve.
Canadian Dollar
The Canadian Dollar (CAD) ended last week face down in the mud, with a massive contraction in Canadian retail sales (0.8% to -1.2%) and stagnant consumer price inflation growth (2.2%, rather than the expected 2.6%) leaving the ‘Loonie’ floundering.
Beyond the poor data, the apparent failure of NAFTA negotiations and worsening trade relations with their southern neighbour only confounded the issue, with the outlook for the Canadian Dollar now very much one of doom and gloom.
New Zealand Dollar
The ‘Kiwi’ Dollar benefitted from a slightly weaker US Dollar on Friday, but a marked fall in dairy prices, New Zealand GDP growth and finally, credit card spending, left the outlook for the New Zealand Dollar rather negative.
There isn’t a great deal going on in New Zealand’s data calendar today, but tomorrow’s trade balance result for May could prove a significant mover, with a larger trade surplus liable to send NZD higher and a move towards deficit likely to extend its weakness.
Data Released
25th June 18:00 EUR German IFO Assessment Results