Pound Gains After Latest Brexit Poll, US Dollar Eyeing PCE Data
DailyFX.com -
Talking Points:
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Australian Dollar outperforms as news-flow undercuts RBA easing chances
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British Pound gains as latest polling results weigh against “Brexit” worries
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US Dollar may return on the offensive if PCE data boosts Fed rate hike bets
A recovery in risk appetite bolstered the sentiment-linked commodity-bloc currencies in overnight trade, with the Australian, Canadian and New Zealand Dollars tracking regional share prices and S&P 500 futures upward. The Aussie outperformed after supportive economic data weighed against RBA rate cut speculation.
Most notably, building approvals unexpectedly posted the first year-on-year gain in six months. Traders may have interpreted the reading as indicative of bets on buoyant housing demand, meaning the central bank’s macro-prudential efforts to cool the real estate space are falling short. In turn, this may limit scope for easing in the near term. Indeed, the Aussie rallied alongside front-end bond yields.
The British Pound likewise pushed higher in a move that may reflect easing “Brexit” fears after an ORB poll showed 51 to 46 percent lead for respondents favoring the UK remaining in the European Union, with just 3 percent undecided. The US Dollar traded lower as 2-year T-bond futures rose, implying a pullback in front-end yields that may point to a moderation in Fed rate hike bets.
Looking ahead, May’s flash Eurozone CPI report headlines the data docket in European hours. The headline year-on-year inflation rate is expected to print -0.1 percent, marking the fourth consecutive month in negative territory. The outcome seems unlikely to trigger a strong response from the Euro as the ECB remains locked in wait-and-see mode, monitoring progress on existing stimulus efforts.
April’s US PCE inflation gauge – the Fed’s favored price growth indicator – captures the spotlight later in the day. The core year-on-year rate is forecast to register at 1.6 percent, unchanged from the prior month. US economic data has increasingly outperformed relative to consensus forecasts in recent weeks. This opens the door for an upside surprise that boosts June rate hike chances and sends the greenback upward.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
| 22:45 | NZD | Building Permits (MoM) (APR) | 6.6% | - | -9.7% |
| 23:01 | GBP | Lloyds Business Barometer (MAY) | 32 | - | 38 |
| 23:30 | AUD | Weekly Consumer Confidence Index (MAY 29) | 113.2 | - | 115.7 |
| 23:30 | JPY | Jobless Rate (APR) | 3.2% | 3.2% | 3.2% |
| 23:30 | JPY | Job-To-Applicant Ratio (APR) | 1.34 | 1.30 | 1.30 |
| 23:30 | JPY | Overall Household Spending (YoY) (APR) | -0.4% | -1.3% | -5.3% |
| 23:50 | JPY | Industrial Production (MoM) (APR P) | 0.3% | -1.5% | 3.8% |
| 23:50 | JPY | Industrial Production (YoY) (APR P) | -3.5% | -5.0% | 0.2% |
| 01:00 | NZD | ANZ Activity Outlook (MAY) | 30.4 | - | 32.1 |
| 01:00 | NZD | ANZ Business Confidence (MAY) | 11.3 | - | 6.2 |
| 01:30 | AUD | Net Exports of GDP (1Q) | 1.1 | 0.7 | 0.0 |
| 01:30 | AUD | BoP Current Account Balance (1Q) | -20.8b | -19.5b | -22.6b |
| 01:30 | AUD | Building Approvals (MoM) (APR) | 3.0% | -3.0% | 2.9% |
| 01:30 | AUD | Building Approvals (YoY) (APR) | 0.7% | -6.7% | -5.4% |
| 01:30 | AUD | Private Sector Credit (MoM) (APR) | 0.5% | 0.5% | 0.4% |
| 01:30 | AUD | Private Sector Credit (YoY) (APR) | 6.7% | 6.5% | 6.4% |
| 03:00 | NZD | Money Supply M3 (YoY) (APR) | - | 7.8% | |
| 04:00 | JPY | Vehicle Production (YoY) (APR) | - | 1.2% | |
| 05:00 | JPY | Small Business Confidence (MAY) | 47.5 | 47.8 | |
| 05:00 | JPY | Housing Starts (YoY) (APR) | 4.1% | 8.4% | |
| 05:00 | JPY | Annualized Housing Starts (APR) | 0.950m | 0.993m | |
| 05:00 | JPY | Construction Orders (YoY) (APR) | - | 19.8% |
European Session