Australian Dollar
The Australian Dollar kicked off a new week of trading strongly, with the South Pacific currency registering gains of over 1% against a number of its major peers.
The AUD/GBP exchange rate surged almost 3% on Pound softness while AUD/EUR jumped nearly 2% and AUD/USD prepared to close out the European session 1.2% higher.
While news relating to the UK’s EU referendum and economic output in the Eurozone was largely responsible for the Australian Dollar’s advance on its European rivals, the ‘Aussie’s widespread gains were also in response to rallying commodities and stocks.
With demand for higher-risk assets heightened, the Australian Dollar failed to react to a dip in China’s MNI Business Indicator for February from 52.3 to 49.9.
The ANZ Roy Morgan Weekly Consumer Confidence Index (set for release this morning) is of low volatility and unlikely to trigger much AUD movement. However, as long as the US Dollar’s appeal remains limited and the stock uptrend continues, the Australian Dollar could extend gains.
Sterling
The Pound initially rallied in response to the news that the UK’s in-out EU referendum would be held on June 23rd. However, Sterling endured a swift and dramatic reversal of fortunes on Monday as Mayor of London Boris Johnson made his feelings known.
To the surprise of many, Johnson came out as a supporter of the ‘Out’ campaign, and given his political sway, concerns that the development could increase the odds of the UK voting to leave the European Union saw Sterling register declines of over 1.5% against AUD, USD, EUR, NZD and CAD.
The AUD/GBP exchange rate was able to jump to a high of 0.5126 and with no UK ecostats due on Tuesday to halt Sterling’s slide, we may see the British currency hit new multi-year lows against its key rivals.
Euro
Heightened demand for higher-risk assets left the Euro struggling on Monday and the AUD/EUR exchange rate was able to consolidate and extend gains following the publication of Markit Manufacturing/Services/Composite PMIs for the Eurozone.
With the rate of output in the currency bloc as a whole and the region’s key economies coming in below forecast levels, with some gauges moving perilously close to the 50 mark separating growth from contraction, the odds of the ECB expanding stimulus measures in the near future increased and the Euro broadly softened.
In the hours ahead the Australian Dollar to Euro exchange rate could experience volatility as a result of the German IFO Business Climate/Current Assessment/Expectations figures.
US Dollar
Rallying stock and oil prices left the US Dollar languishing on Monday. The ‘Greenback’ then came under additional pressure as the US Markit Manufacturing PMI dropped from 52.4 to 51.0 in February instead of remaining unchanged as forecast.
Markit economist Chris Williamson said of the figure; ‘US factories are reporting the worst business conditions for over three years. Every indicator from the flash PMI survey, from output, order books and exports to employment, inventories and prices, is flashing a warning light about the health of the manufacturing economy.’
The Australian Dollar to US Dollar exchange rate leapt above the 0.72 level during the North American session.
The next cause of notable AUD/USD movement is likely to be the US Consumer Confidence index, set for release on Wednesday.
Canadian Dollar
The ‘Loonie’ climbed alongside the price of Canada’s key commodity on Monday, with CAD only posting declines against its fellow outperforming commodity currencies, the Australian and New Zealand Dollars.
Canadian news is in short supply for much of the week, but investors will be taking an interest in a speech due to be given by a Bank of Canada official on Thursday.
New Zealand Dollar
The New Zealand Dollar surged across the board on Monday, even besting the rallying ‘Aussie’, as domestic data bolstered the positive impact of supportive trading conditions for higher-risk assets.
New Zealand’s Card Spending report showed a 2.3% increase in January and a 8.9% annual advance.
Data Released
Feb 23rd 09:30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index
Feb 23rd 18:00 EUR German GDP (4Q) (YoY)
Feb 23rd 20:00 EUR German IFO Business Climate
Feb 23rd 20:00 EUR German IFO Current Assessment
Feb 23rd 20:00 EUR German IFO Expectations