Australian Dollar Limited Ahead of Potentially Dovish RBA Meeting Minutes

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Headlines

  • Markets Prepare for Potentially Dovish RBA Minutes – Mixed labour market data points to dovish RBA
  • Euro Resilient Ahead of ECB Draghi Remarks – Markets prepare for ECB Forum on Central Banking
  • CAD Bolstered by Rise in Crude Oil Prices – Demand for the ‘Loonie’ slowly returns
  • US Dollar Posts Mixed Performance – Optimism remains on hawkish US Fed


Australian Dollar

The Australian Dollar (AUD) encountered pressure at the start of the week, bombarded by weakening Chinese financial markets and market apprehensions ahead of the release of the Reserve Bank of Australia’s (RBA) meeting minutes for June.

Both the Hong Kong Hang Seng Index and Singapore’s Straits Times Index traded lower, whilst the Chinese Yuan (CNH) also encountered pressures due to ongoing concerns regarding escalating trade tensions between the US and China.

Looking ahead, today’s RBA minutes will likely take precedence, and given the current slack in the Australian labour market and the general cautiousness of the central bank, it seems unlikely that the minutes will have a positive effect on the ‘Aussie’ Dollar’s trajectory.

Sterling

The Pound (GBP) tumbled at the start of the week, falling as investors responded to news that the British Chambers of Commerce (BCC) has lowered its GDP growth forecasts for the UK, citing weakness in consumer spending, business investment and trade.

The BCC downgraded its growth forecast for 2018 from 1.4% to 1.3%.

The 2019 forecast was similarly cut from 1.5% to 1.4%.

This news, combined with ongoing Brexit uncertainty weighed on Sterling. Looking ahead, however, investors will be keen to assess this week’s Bank of England (BoE) rate decision, due on Thursday.

Euro

Lacking much in the form of data releases for the Euro (EUR), investors instead waited for the ECB Forum on Central Banking in Sintra, Portugal, with European Central Bank (ECB) President Mario Draghi due to speak on monetary policy.

Investors are currently treading cautiously around the single currency, with Mr Draghi’s recent dovish comments from last week’s rate decision still fresh in mind.

US Dollar

The US Dollar (USD) posted a mixed performance on Monday into Tuesday, supported by the current stance of the US Federal Reserve as the most hawkish of the major central banks, but limited by the tit-for-tat trade responses from China.

On that note; any escalation in US-China trade relations could spook investors further, but analysts argue that China’s current tariffs – if implemented – would not put much of a dent in US GDP.

Looking ahead, investors don’t have much to go on this week in regards to US data, so we could see political developments and trade continuing to take a front seat.

Canadian Dollar

The Canadian Dollar (CAD) made a surprising recovery at the start of the week, supported by a rise in crude oil prices as traders prepared for OPEC’s upcoming meeting.

Dwindling US crude inventories seemed to also keep the ‘Loonie’ afloat, but concerns regarding the collapse of NAFTA negotiations and the ongoing trade disagreement between the US and Canada continued to keep a low ceiling on the Canadian Dollar.

New Zealand Dollar

The New Zealand Dollar (NZD) climbed this morning, shrugging off global trade concerns and falling market risk appetite, and capitalising on a Rabobank report that dairy commodity prices have been rallying in Q2 2018.

According to the report, buoyant demand for butterfat and cheese has kept prices high, whilst supply in the US and Europe has failed to meet market expectations, setting the tone for a more bullish market.

This boded extremely well for the ‘Kiwi’ Dollar, which – given the fact that dairy is New Zealand’s primary export – tends to rally on any positive dairy-related news.

Looking ahead, investors will be preparing to analyse the results of the bi-weekly global dairy trade price auction, with a rise liable to extend NZD’s climb.

Data Released

19th June 03:30 EUR ECB Draghi Opening Remarks in Sintra
19th June 11:30 AUS RBA June Meeting Minutes
19th June 18:00 EUR ECB Draghi Speaks in Sintra

Post by TorFX

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