Australian Dollar
A combination of improved risk sentiment, US Dollar weakness and rallying commodities saw the Australian Dollar push above 0.72 against USD and firm against the Pound ahead of the release of domestic retail sales figures. However, with consumer spending unexpectedly stagnating in December, the ‘Aussie’ pared gains. The RBA’s monetary policy statement, which left the door open to future rate cuts, failed to lend AUD much support.
The Australian Dollar’s downtrend was cemented as the US unemployment rate unexpectedly eased to 4.9%. Although the US was shown to have added fewer positions than forecast, the lower jobless rate was enough to bolster Fed rate hike expectations and weaken risk appetite.
Australian data with the potential to inspire AUD movement over the next five days includes the nation’s New Home Sales ecostat, NAB Business Confidence measure, Westpac Consumer Confidence gauge and domestic Consumer Inflation Expectations report. If consumers appear concerned about the pace of price growth it could weigh on the Australian Dollar.
Given the close trading links between China and Australia, Foreign Direct investment and New Yuan Loan figures for the former nation will also be of interest.
Sterling
Last week’s UK reports were decidedly mixed, with the positive impact of solid manufacturing and services data being wiped out by the Bank of England’s (BoE) dovish interest rate stance.
With the majority of investors now envisaging borrowing costs remaining on hold until 2017, the Pound approached the weekend trending lower against not only the Australian Dollar but also the majority of its most-traded currency counterparts. However, AUD/GBP did manage to recoup some losses following the surprising drop in the US unemployment rate.
Investors with an interest in the AUD/GBP exchange rate should focus on UK trade balance numbers, industrial/manufacturing production stats, the NIESR GDP estimate and construction output figures as the week progresses.
Euro
After riding high for much of the week thanks to US Dollar weakness, the Euro dipped against the ‘Greenback’ as USD rallied in the wake of the latest jobs figures. With demand for higher-risk currencies stymied by the US news, the AUD/EUR currency pair shed 0.5% during the European session.
In terms of this week’s Eurozone news, the most market-moving of the scheduled events include the Eurozone’s Sentix Investor Confidence Index, German trade balance numbers, final German CPI and fourth quarter growth figures for the Eurozone and its largest economies.
If the upcoming ecostats from the currency bloc support the argument in favour of the European Central Bank (ECB) expanding quantitative easing as the year progresses, the Euro could slide.
US Dollar
Almost all of last week’s US reports fell short – but the nation came up trumps with Friday’s highly influential US Non-Farm Payrolls report. The jobs gain for January may not have been as impressive as hoped, coming in at 151K, but December’s stat was negatively revised by less-than-forecast and the total jobless rate slipped from 5.0% to 4.9%. Average earnings also climbed by 0.5% on the month, a more impressive increase than the 0.3% gain expected. The report eased concerns that the Fed may refrain from hiking borrowing costs in Q1 of 2016 and pushed the US Dollar broadly higher.
With USD gaining, higher risk currencies like AUD and NZD dipped.
After last week’s heavy US calendar, this week looks a little sparse in terms of influential reports for the world’s largest economy. Of those set for release the following are likely to have the most impact on the Fed’s attitude towards further interest rate adjustments and consequently the currency market; wholesale inventories, monthly budget statement, Yellen’s appearance before the senate banking committee and initial jobless/continuing claims numbers.
Canadian Dollar
After firming during the latter half of last week thanks to climbing crude oil prices, Canada’s employment figures for January failed to put the ‘Loonie’ under pressure. The Canadian economy actually lost -5.7K positions rather than gaining the 6.0K predicted, resulting in an increased unemployment rate of 7.2%.
Even after the data was published the Canadian Dollar retained the upper hand against its Australian rival. The only Canadian data on the cards for this week is the nation’s Building Permits and New Housing Price Index.
New Zealand Dollar
While demand for the New Zealand Dollar was down thanks to Friday’s US employment numbers, the appeal of the Australian Dollar was also negatively affected and the AUD/NZD exchange rate subsequently ended the week trading statically.
However, if this week’s New Zealand Card Spending, House Sales and Performance of Manufacturing data impresses, NZD could push higher against AUD amid reduced fears of a Reserve Bank of New Zealand rate cut.
Data Released
Feb 8th 20:30 EUR Eurozone Sentix Investor Confidence (FEB)
Feb 9th 11:30 AUS NAB Business Confidence (JAN)
Feb 10th 10:30 AUS Westpac Consumer Confidence
Feb 11th 02:00 UK NIESR GDP Estimate (JAN)
Feb 11th 06:00 US Monthly Budget Statement (JAN)
Feb 11th 08:30 NZ Performance of Manufacturing Index (JAN)
Feb 11th 11:00 AUS Consumer Inflation Expectation (FEB)
Feb 12th 02:00 US Fed’s Yellen Address to Senate Banking Committee
Feb 12th 11:30 AUS Home Loans (DEC)
Feb 12th 21:00 EUR Eurozone Gross Domestic Product (4Q)