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FX Update: The RBA to draw focus

Overview
A short week this week and lighter trading is expected with US markets closed for the July 4th Independence Day holiday tonight. However we also have a raft of economic data being released over the next few days, culminating in the US Non-farm payroll figure for June out on Friday night.  Also of note are the Fed minutes for the June meeting released on Wednesday, then the private payroll figure (ADP jobs report) coming out on Thursday. Away from the US, the RBA has its rate decision later this afternoon and a monetary report will be released by the ECB on Thursday. There is plenty of information to drive volatility on currency and equity markets. While the US Fed started its tightening cycle back several months , a point to watch is the more hawkish tone now emerging from some of the other Central banks, as a greater focus on financial stability risks emerges. Read more

Economies of Note

Australia
The Australian dollar ends the week in better form than at the start. It is now trading around 0.7682, after a 3 month high of 0.7686 overnight, up considerably from the week’s low of 0.7561, with the tone more positive and swinging to a “buy-the-dips” story helped by the firming iron price. Aussie fundamentals appear to be still a little mixed but jobs data released yesterday showed a further increase in vacancies, and this more positive tone should carry the AUD to threaten 0.7700 over the next few days. However US data next week will be critical to future direction and it will be hard for the AUD to extend much beyond the 0.7700 level ahead of the US Non-farm payroll figure next Friday. Read more

FX Update: The NZD remains well supported

Overview
Markets have been mostly range bound at the start of the week, with little to cause any major changes in current trends. Although US data in the form of Durable goods data was soft overnight, raising some questions over the resilience of US growth, the Fed desire to normalise interest rate policy continues which has helped the USD to hold onto gains against its main trading partners especially the JPY and EUR. Commodity prices remain choppy but the overall negative trend for oil prices continues and both WTI and Brent oil are now in a bear market, prices having fallen over 20% from peaks earlier this year. Read more

FX Update: NZD range bound ahead of Thursday’s RBNZ meeting

Overview
A quiet start to the week with relatively little economic data overnight to influence markets. Overnight US equities continued to surge higher with both the S&P500 and Dow indices rising to new record highs. On commodity markets oil continued to weaken, with WTI crude down 1.2% to US$44.20/brl continuing a four week decline as US drillers add oil rigs, circumventing attempts by OPEC to rebalance an oversupplied market. Also making news last night was the long anticipated news of an Australian credit downgrade by rating agency Moody’s, who dropped the credit rating of the four Australian banks, ANZ, Westpac, CBA and NAB on concerns over “elevated risks within the household sector due to high levels of indebtedness” i.e. Mortgages. Read more

Economies of Note

Australia
The AUD traded higher yesterday, hitting a two month high of 0.7631 against the USD on much better than expected jobs data. Figures showed that May unemployment fell to 5.5% exceeding expectations of 5.7%. The data was encouraging as it showed that the jobs growth was all in full time employment with 52,100 full-time positions added to the economy while 10,100 part-time ones fell away. This defied previous forecasts of an increase of only 10,000 new jobs. Read more

FX Update: Central banks in focus

Overview 
Markets have opened the week with a more stable tone, with little in the way of major data releases, as they wait for this week’s main event, the Fed meeting on Thursday. Expectations are for a rate hike of 0.25%, but concentration will be on the accompanying rhetoric and if there is a pointer to another one or two rate increases later in the year. An indication of two further rate hikes would put the market on the back foot as while another hike is also widely expected a second hike is not currently priced-in and increased probability of such an event would likely see a jump in USD values. The fallout from the UK continues with the Conservative government looking at six-and-sevens as it struggles to create some order from the political chaos. Read more

Economies of Note

Australia
After Tuesday’s meeting where the RBA kept rates on hold as expected at 1.5% the AUD has rallied back over 0.7500 against the USD supported by a better than expected GDP result for the March quarter. Data released showed that the economy grew by an anaemic 0.3% in the first quarter, but this was better than suggested after the poor balance of payments figure released on Tuesday. After breaking through 0.7500 the AUD extended gains to a month high at 0.7565, has now consolidated around the 0.7540 level. The RBA reaffirmed its expectations of ongoing strengthening economic growth in its Tuesday statement even though year-on-year growth has slowed from 2.4% to 1.7%, placing GDP growth close towards the bottom of the 2-3%  RBA target range. Read more

FX Update: Buckle up for an eventful week

Overview
US equity markets opened the week off last week’s all-time highs, with the USD slumping with crude oil as risk trades took a back seat and markets opened a week full of events on a cautious tone. This week will be dominated by 3 main events all occurring on Thursday, the UK election (we should know the outcome by Friday midday), the European Central Bank (ECB)  meeting and the former head of the FBI James Comey is scheduled to testify before the Senate Intelligence Committee on Thursday morning in the US. Hopefully in the UK the Conservatives will win with an increased majority, giving some certainty to Brexit negotiations. The ECB will continue with a “steady-as-she goes” policy statement (expected by the market) and Comey’s testimony will not have a “smoking gun” that destabilises (further) the Trump administration. Read more

Economies of Note

Australia
The Australian dollar had a good and bad day yesterday with choppy trading in a day dominated by data. The release of Australian April retail sales which were better than expected, showing a 1% growth for the month saw the AUD climb to 0.7453, but then was battered down to 0.7372 after Chinese manufacturing PMI figures came in at 11 month lows and iron ore prices continued to fall hitting an 8 month low. Next week will see the RBA rate decision on Tuesday, expectations are for no change but as always the wording around the statement and any forward guidance given by the RBA will be closely analysed. Read more

FX Update: A quiet start to the week

Overview
Last week ended on a mixed note as although the S&P 500 closed on Friday at an all-time high, there was negative news, with Hong Kong receiving a credit rating downgrade from Moody’s from Aa1 to Aa2, this followed a cut, for the first time since 1989, in China’s debt rating on Wednesday. A shortened trading week due to the US Memorial Day holiday yesterday will give traders a lot to digest over a reduced period as a raft of economic data is released this week. Markets are pricing in an 80% chance of a Fed rate hike in June but as always data is key. Later tonight will bring US personal consumption expenditure index data, the central bank’s preferred gauge of inflation. Wednesday will bring initial jobless claims and ADP payrolls, a day later traders get manufacturing survey results, and the week culminates with monthly Non-Farm payroll data, the bright spot of the economy.  Read more