Australian Dollar
The Australian Dollar initially slumped yesterday, but was later able to recover. The April trade balance figure shocked markets after narrowing sharply from AU$2.6 billion to AU$0.55 billion, against expectations of a fall to AU$2 billion. The damage from Cyclone Debbie turned out to have been much more severe than expected, causing coal exports to tumble -45%. While imports fell -1%, exports dived -8%.
The Chinese consumer price index for May is likely to overshadow any Australian data today. Prices are forecast to have accelerated from 1.2% to 1.5%, so the Australian Dollar could recover yesterday’s losses.
Sterling
The AUD/GBP exchange rate was, unsurprisingly, able to creep higher yesterday even though the ‘Aussie’ was weak overall. The Pound had started the London session edging higher, thanks to the recent polls showing the Conservatives were likely to get a strong majority. However, investor confidence wasn’t impermeable and Sterling began ceding its gains later in the day. The exit polls will be released shortly, so expect the Pound to wake up from its slumber.
There may be a slew of UK data scheduled for release today, but it is highly unlikely the markets will be distracted enough from the election results to pay it any attention.
Euro
The Euro remained on the decline yesterday after the European Central Bank (ECB) confirmed worst fears by releasing new downgraded inflation forecasts after their monetary policy meeting. Expectations for price growth during 2017 were lowered from 1.7% to 1.5%, while 2018 projections have been lowered from 1.6% to 1.3% and 2019 estimates have been trimmed from 1.7% to 1.6%. While the Governing Council did drop a reference to potentially lowering interest rates, it also commented that quantitative easing could always be extended further if necessary.
Most of the data due for release from the Eurozone today is low-impact, so the results of the UK election, the reaction to Comey’s testimonial and the continued fallout from the ECB policy decisions, are likely to be bigger drivers of the common currency.
US Dollar
The US Dollar slowly rose against some of its peers yesterday as tensions surrounding the testimonial of former FBI Director James Comey faded even before the US Senate intelligence committee session had begun. USD lost ground versus the commodity currencies, but notched up strong gains versus Pound Sterling and the Euro.
Canadian Dollar
Crude oil was initially slumping yesterday, heading towards its lowest level in six months, but was able to bounce back and notch up gains later in the day. Oil was still rocked by the recent surprise rise in US crude oil stockpiles, but the fact the commodity found support before slumping further helped appetite return.
Canada’s change in employment and unemployment figures are set for release late tonight, so the Canadian Dollar could be in for strong movement later.
New Zealand Dollar
Weakness in the US Dollar and the continued strength in the New Zealand economy were helping keep the New Zealand Dollar in strong demand yesterday. ‘Everything locally is running in the NZD’s favour, with the terms of trade flirting with record highs and the economic cycle maintaining its momentum,’ ANZ stated in a research note.
There is no New Zealand data set for release today so, like the Australian Dollar, the New Zealand Dollar will be mostly influenced by the Chinese inflation data due this morning.
Data Released
June 9th 11.30 CNY Consumer Price Index (YoY) (MAY) 1.5%
June 9th 16.00 EUR German Trade Balance (euros) (APR €25.1b
June 9th 22.00 GBP NIESR Gross Domestic Product Estimate (MAY) 0.3%
June 9th 22.30 CAD Net Change in Employment (MAY) 11k