US Data, RBNZ Decision in Focus

Attention today is on the BoE, US Durable Goods Orders, and the RBNZ's latest interest decision. The RBNZ is expected to keep rates on hold.

Previous Day's Market Highlights

The dollar saw a bid tone yesterday, which enabled it to push lower—within familiar ranges—towards 1.32 against the pound and 1.16 against the euro. Newly appointed MPC Member Haskel, who will replace the outgoing McCafferty, a hawk, said he agreed “with the broad direction of travel” but was otherwise relatively dovish, indicating he sees more slack in the economy than the BoE currently does. This contributed to morning pressure on the pound. Should the BoE keep rates on hold in August, it is worth noting the MPC will then lose one of its hawks before subsequent votes. Sterling pared losses in the afternoon session.  
 
The New Zealand dollar weakened overnight in anticipation of softer trade data—which in fact came in better than expected—and ahead of the RBNZ’s June rate decision.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1343 1.1497 1.1314 1.59%
GBP/USD 1.3234 1.3473 1.3102 2.75%
EUR/USD 1.1666 1.1853 1.1510 2.89%
GBP/AUD 1.7922 1.7981 1.7395 3.26%
GBP/NZD 1.9398 1.9415 1.8905 2.63%
GBP/CAD 1.7609 1.7791 1.7055 4.14%

Today's Market Highlights

While the calendar picks up today, exchange rates may largely continue to trade around current levels. The Bank of England’s Financial Stability Report will be in focus this morning (press conference from 11:00 BST). In the afternoon, soft Durable Goods Orders could weigh on the dollar, while a pick-up in Pending Home Sales may later provide some support. Markets will continue to keep an eye on the latest trade headlines. Fed Member Quarles is to speak on financial regulation and Fed Member Rosengren is to speak on ethics and economics.
 
BoC Governor Poloz will give a speech this evening titled “Let Me Be Clear: From Transparency to Trust and Understanding” (20:00). Markets will keep an eye for any monetary policy implications; otherwise, the speech may have limited impact on the Canadian dollar.
 
The RBNZ is likely to keep interest rates on hold at 1.75% when it meets this evening UK time. In May, under new Governor Adrian Orr, the Bank said that interest rates would remain on hold “for some time” and that the next move could be in either direction. Additionally, recent data have been mixed, and inflation remained only at the lower end of the Reserve Bank’s target range in Q1.
 
Interest rates were last changed in November 2016, when the RBNZ cut rates by 25 basis points. The US currently targets a Federal Funds rate of 1.75% to 2.00%, outpacing interest rates in New Zealand for the first time since 2000. An upbeat economic assessment could strengthen the kiwi, while a more cautious view could weaken it.

Today's Economic Calendar

Time Currency Release Consensus Previous
11:00am GBP BoE Governor Carney Speaks
1:30pm USD Durable Goods Orders (May) -1.0% -1.6%
1:30pm USD Core Durable Goods Orders (May) 0.5% 0.9%
3:00pm USD Pending Home Sales MoM (May) 0.5% -1.3%
3:30pm USD EIA Crude Oil Inventories (22 June) -2.481M -5.914M
4:00pm USD Fed's Quarles Speaks
5:15pm USD Fed Member Rosengren Speaks
8:00pm CAD BoC Governor Poloz Speaks
10:00pm NZD RBNZ Interest Rate Decision 1.75% 1.75%
10:00pm NZD RBNZ Rate Statement

Caxton