Thursday promises to be a rocking day in the foreign exchange market with a trio of major events. We get set. The Australian dollar was the top performer Wednesday while the Canadian dollar lagged. Australian trade balance is due up before the major news begins to hit. A new Premium trade is due tomorrow in addition to the existing 6 trades.
Markets were choppy Wednesday as ECB leaks about softer inflation forecasts and higher growth hit. That was mixed in with the final UK election polls and an early preview of Comey’s testimony.
All will be revealed in the day ahead, starting with the ECB. The first sources story said inflation forecast would be cut to 1.5% for this year from 1.7%, largely on energy. It added that 2018 will be cut one tick to 1.5% and 2019 to 1.5% from 1.7%. That was followed by a separate report that said inflation forecast would edge lower and growth would be boosted. The euro fell 70 pips and then recovered on the pair of leaks.
Later, the opening statement from former FBI director Comey was released. In it, he detailed improper requests and hints from the President but it has no bombshells or revelations that hadn’t already been reported. In the aftermath, USD/JPY recovered to 109.80 from 109.35.
The final event Thursday will be the UK election. The wide spreads in the polls continued with the showing the Conservatives anywhere from 12 to 1 point ahead of Labour. The final numbers tended to show continued momentum from Labour but not enough to stop May from winning a majority.
Cable touched a two-week high but it was a choppy trade. In anything, watch for last-minute bets in the market on May.
Switching gears to the Asia-Pacific region, yesterday’s Australian GDP was in-line with the +0.3% q/q reading expected and the RBA brushed off the soft quarter but the focus now turns to Q2. A big input is trade and April trade balance is due at 0130 GMT. The consensus is for a A$2.0B surplus.
AUD has been perky this week and seasonally it’s in a strong June-July period and coming off a recent ebb. A positive surprise would help extend the four-day winning streak. But much bigger moves are coming elsewhere with the ECB, Comey and the UK election results all due later Thursday.
