Australian Dollar
The Australian Dollar was on strong form yesterday after first-quarter GDP figures showed the country had broken the world record for the longest period of recession-free growth from a developed nation. Expansion of 0.3% in the first three months of 2017 marked the 103rd quarter without a recession, which is defined as two consecutive quarters of negative GDP. Although this represents a marked slowdown on 2016 Q4’s 1.1% expansion, the ‘Aussie’ still responded positively.
With Chinese trade data, the Australian trade balance and high-impact developments from the UK, Eurozone and US tomorrow, the Australian Dollar could be in for significant volatility.
Sterling
AUD/GBP made strong gains yesterday, although elsewhere the Pound had more-than rebounded after an early bout of weakness. The Pound was largely shrugging off pre-election jitters, demonstrating that, despite the wildly-varying polls, the markets have settled on the conclusion that a strong majority for the Conservative Party is still the most likely outcome.
The UK heads to the polls today, so Sterling will be reacting entirely to political developments throughout the day.
Euro
The Euro slumped yesterday on the back of rumours that the European Central Bank (ECB) was preparing to cut its inflation forecasts for the next couple of years. EUR had found some support in recent days on the back of hopes the Governing Council would hint at plans to start tapering the quantitative easing programme, so this latest development represented something of a curveball.
ECB President Mario Draghi’s post-meeting press conference today will likely decide whether the Euro rises or falls. He is traditionally dovish, so there is a good chance it will be the latter.
US Dollar
USD was on soft form yesterday as markets awaited today’s key testimony from former FBI Director James Comey. The US Dollar did manage to make gains against the Euro, but only thanks to the latter’s weakness. The latest growth forecasts from the Organisation for Economic Co-operation and Development (OECD) were pessimistic, adding to the gloom surrounding the ‘Greenback’. The organisation predicts global growth will hit 3.6% next year – its best rate in around six years – but has trimmed US growth outlooks from 2.4% to 2.1% for this year and from 2.8% to 2.4% in 2018.
Comey’s testimony is scheduled to begin at midnight ACT, so the US Dollar is likely to remain on lacklustre form until he has spoken.
Canadian Dollar
The Canadian Dollar was mostly on weak form yesterday, although it managed to make strong gains versus the Euro. The OECD’s latest forecasts warned that more action was required to reign in Canada’s overheating housing market. Additionally, crude oil was slumping after the latest crude oil stocks figures from the US showed a surprise surge in stockpiles rather than a decline as forecast. Inventories climbed by 3.3 million barrels instead of declining by -3.46 million, which pushed Brent down to its weakest level since early in May.
Canadian housing starts figures for May will be released tonight.
New Zealand Dollar
The New Zealand Dollar was largely on positive form yesterday, enjoying strong risk appetite as the safer Pound Sterling, Euro and US Dollar all weakened on political events. Investors were also cheered by comments from Finance Minister Steven Joyce, who said that a recent shrinking in the current account deficit was due to firms adapting to cope with the stronger ‘Kiwi’ and that there was more room for improvement.
New Zealand’s low impact truckometer heavy reading for May is unlikely to have much of an impact this morning, given the severity of geopolitical developments.
Data Released
June 8th GBP UK General Election
June 8th 08.00 NZD ANZ Truckometer Heavy (MoM) (MAY)
June 8th 11.30 AUD Trade Balance (Australian dollar) (APR) AU$1.9b
June 8th 22.15 CAD Housing Starts (MAY) 205k
June 8th 22.30 EUR ECB President Mario Draghi Holds Press Conference
June 9th 00.00 USD James Comey Testifies to US Senate Intelligence Committee