An improving outlook on monetary policy, combined with rising appetite for commodity-correlated currencies, pushed the Australian Dollar higher on Friday. The majority of economists surveyed by Bloomberg now believe rates will change at some point in the next twelve months, with more expecting the next move to be a rate hike rather than a rate cut.
It’s a sparse week for Australian data, but June’s Reserve Bank of Australia (RBA) meeting minutes will be released on Tuesday.
The Pound was on mixed form on Friday, allowing the AUD/GBP exchange rate to make minor gains. The Bank of England’s (BoE) split over interest rates was keeping demand for Sterling alive, with markets hoping an interest rate hike would not be far away. However, political concerns were providing headwinds for GBP. It emerged that, just three days before the Brexit negotiations were due to begin, the UK government had still not provided the EU with the basic documents outlining its negotiating position and aims. Brussel had sent its so-called ‘positioning papers’ over on Monday and were still waiting for London to respond.
UK data may be thin on the ground this week, excluding Wednesday’s government borrowing figures, but this is hardly likely to matter. Brexit negotiations begin proper on Monday, so the markets will be focussed on that.
The Euro was buoyed on Friday by news that Greece had finally reached an agreement with its creditors to unlock the next tranche of bailout funds. Greece desperately needs the money to repay debts due next month, so markets have been made very nervous over the past few months by constant delays to this next payment. In other positive news, the International Monetary Fund (IMF) has said it will support the bailout by providing US$2 billion once the Eurozone agrees to debt relief. While not much of a move towards a collaboration, it still represents a step in the right direction.
Friday will see Eurozone consumer confidence data and a slew of Markit PMIs released.
The US Dollar spent Friday on the decline, as traders began taking profit after the recent hawkish outcome of the Federal Open Market Committee (FOMC) meeting. Losses were particularly strong versus the commodity currencies, with high-yields enticing investors away from the US Dollar, which currently doesn’t have much to push it higher, now that the main event is over. The University of Michigan consumer confidence index for June failed to provide any support after slumping much further-than-forecast from 97.1 to 94.5.
There is no high-impact US data scheduled for release this week. MBA mortgage applications figures on Wednesday are the first piece of medium-impact data on the calendar.
Concern continued to build that rising activity from US shale oil producers would undo all the positive movements caused in the market by OPEC’s recent decision to cut production. Although WTI and Brent were edging slightly higher, last week was yet another in which oil prices declined overall. If this continues, crude will have soon experienced its worst losing run since August 2015. Eight well-known hedge funds have cut their positions in the top ten shale firms by a combined -US$400 million due to worry that the industry is contributing to its own demise by returning so heavily to production while the world is still significantly oversupplied with oil.
Friday will see the release of Canada’s consumer price index for May. Considering the Bank of Canada (BOC) has recently surprised with a rather positive attitude, strong inflation data would further support the idea that rates might be hiked sooner than expected.
A strong Business NZ performance of manufacturing index, combined with rising appetite for riskier currencies, helped the New Zealand Dollar to rack up solid gains on Friday. The manufacturing index for May rose to 58.5, while April’s measure was revised up to 56.9.
The Reserve Bank of New Zealand (RBNZ) meets to set monetary policy on Thursday.
June 19th GBP Brexit Negotiations Begin
June 20th 11.30 AUD RBA June Rate Meeting Minutes
June 21st 21.00 USD MBA Mortgage Applications (JUN 16) 0.7%
June 22nd 07.00 NZD Reserve Bank of New Zealand Rate Decision (JUN 22) 1.75%
June 23rd 00.00 EUR Eurozone Consumer Confidence (JUN A) -3
June 23rd 22.30 CAD Consumer Price Index (YoY) (MAY) 1.4%
No related posts.
© TorFX. Unauthorised copying or re-wording of this blog content is prohibited. The copyright of this content is owned by Tor Currency Exchange Ltd. Any unauthorised copying or re-wording will constitute an infringement of copyright.