The main event this week will be the long awaited UK’s EU referendum. Considered by many to not only be the single biggest trading event this year but potentially the biggest planned risk event ever, Thursday is set to be a historic day and the referendum a once in a lifetime trading opportunity. As always on Mondays kick start the week with my prepared currency update below.
USD: Core CPI for May matched expectations at 0.2% m/m and 2.2% y/y. FOMC remained on hold in June, decreasing its FFR forecasts and cited the need to monitor the labour market. NFP for May missed estimates by a wide margin, printing 38k vs 164k expected. The Unemployment Rate dropped to 4.7% and Average Hourly Earnings matched expectations at 0.2% m/m. Core PCE for April matched estimates at 0.2% m/m and 1.6% y/y. Second Estimate GDP for Q1 printed at 0.8%, revised up from the First Estimate of 0.5%.
EUR: Final Core CPI for May printed at 0.8% y/y. Flash GDP for Q1 missed expectations at 0.5% q/q versus expectations of 0.6%, and at 1.5% y/y versus expectations of 1.6%.
GBP: Sterling will be driven by polls leading into the referendum on June 23. CPI for May slightly missed with Core CPI dropping to 1.2% y/y. Second Estimate GDP for Q1 was at 0.4% and 2.0% y/y. Average Weekly Earnings for March increased by 2.0%, above expectations of 1.7%, Claimant Count Change also beat expectations, decreasing by 2,400 vs an expected increase of 4,000.
AUD: The RBA kept rates on hold at the June 7 meeting as was expected, but failed to reference future easing, which supported the AUD. GDP for Q1 printed at 1.1% q/q, above 0.8% expected and 3.1% y/y, above 2.8% expected. The minutes from the May 3 meeting showed the RBA considered waiting for more data before cutting rates.
NZD: Q1 GDP beat estimates at 0.7% vs 0.5% expected. RBNZ left rates on hold at 2.25% on June 9 as expected. The statement was less dovish and the Kiwi rallied. Inflation Expectations for 2 years out sit at 1.64%. The FSR showed concerns over rising house prices but failed to introduce any new macroprudential controls. Q1 employment was mixed with the jobless rate rising to 5.7% but job growth smashing estimates at 1.2% q/q.
CAD: Core CPI remained steady in May at 2.1% y/y. Jobs sector for May showed a drop in the UR to 6.9% and gains of 13,800. GDP for Q1 printed at 0.6% q/q and 2.4% annualised, below expectations.
JPY: The BoJ remained on hold in June which caused massive appreciation in the yen. Final GDP for Q1 was revised up to 0.5% q/q and 1.9% annualised. Tokyo-area CPI Ex-Food & Energy for May printed at 0.5% y/y, below prior of 0.6%, and was flat for the m/m. Nationwide CPI Ex-Food & Energy for April printed at 0.7% y/y, in line with prior, and rose 0.3% m/m. The BoJ’s measure of core inflation dropped to 0.9%.
CHF: The SNB left interest rates unchanged at -0.75% as expected in June. Fundamentally a weak currency, highly correlated with moves in EUR.