Currency Update 13th of June

Central banks will be in focus this week with the Federal Reserve, Bank of Japan, Swiss National Bank, and Bank of England all due to announce their latest monetary policy decisions. As always on Mondays kick start the week with my prepared currency update below.

Currency Update

USD: 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%. Minutes from the April 26-27 meeting were hawkish and woke the market up to the chance of a hike in June.

EUR: Flash 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: 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. CPI data for April missed estimates across the board with CPI y/y declining to 0.3%, below expectations of remaining unchanged at 0.5%, core CPI y/y missed at 1.2% versus expectations of 1.4%.

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: 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: 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. Core CPI for April rose by 2.2% y/y versus expectations of 2.0% and by 1.7% for headline CPI y/y in line with expectations. A neutral to weakly-bullish currency, with sentiment in lock-step with WTI.

JPY: 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: CPI beat estimates for April, printing at 0.3% m/m, above the 0.1% expected. Fundamentally a weak currency, highly correlated with moves in EUR.

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