Market Drivers for June 08, 2016
Europe and Asia
CNY: Trade 49.8B vs. 55.6B
UK: MP 2.3% vs. 0.0%
UK: IP 1.6% vs. -0.4%
North America
CAD: Housing Starts 08:30
CAD: Building Permits 08:30
USD: JOLTS 10:00
It's been a relatively subdued night of trading in the currency market with the euro remaining in a very narrow 30 pip range, but strong import data out of China boosted investor sentiment towards the comm dollars, helping to lift the kiwi through the key .7000 level in midday Asian trade.
Chinese trade data came in a bit worse than projected on a headline basis coming in at 49.8B versus 55.6B eyed, but the underlying figures suggested that demand from the world's second largest economy is starting to pick up. Imports came in at -0.4% far better -6.8% expected, lifting investor spirits. Chinese imports are one of the earliest data points in the global manufacturing cycle and the rise last month suggested that the country's industrial sector may be seeing a pickup in demand. In addition Chinese retail auto sales were up by 11.4% in May showing that despite the slowdown in the Chinese economy, the transition towards consumer demand continues at a robust pace.
The news helped to boost both the Aussie and kiwi with the latter piercing the key .7000 level in afternoon Asian trade. Later today the market will receive the RBNZ decision with most participants expecting the central bank to remain pat. Over the past month, key New Zealand economic metrics including milk prices have improved and there is very little reason for the RBNZ to ease, especially as housing prices are rising at double digit levels.
The central bank may once again try to jawbone the currency, as the kiwi is now 3 cents higher than when the last RBNZ meeting occurred, but given the improving state of demand it's unlikely the the rhetoric from the monetary authorities will be overly dovish. That could provide a further boost for NZD/USD, much like yesterday's RBA announcement lifted the Aussie.
Elsewhere, UK Manufacturing and Industrial Production printed far better than forecast rising 2.3% and 1.6% respectively against flat expectations. The large jump was led by pharma, car and gas production with pharma rising at it highest pace since February 2014. Cable jumped nearly 50 points in reaction to the news, but selling quickly unwound the move and pushed the pair below 1.4550. The pair remains capped at the 1.4600 level for now and the Brexit polling newsflow appears to have ceased, for now.
In North America it's another quiet calendar day with nothing but JOLTs and oil inventory data on the docket. The majors remain in a very narrow trading pattern after Friday's NFP report with EUR/USD unable to break out of its 1.1300-1.1400 range for the third day in a row. Those numbers will remain critical to market players as traders look for any directional clues as the day proceeds.