Australian Dollar
Rallying global stocks and commodity prices sent the Australian Dollar shooting higher on Monday, with the South Pacific currency rocketing to a two-month high against the US Dollar and a nine-month high against the Pound.
Although AUD held the 0.72 level against the US Dollar and remained trading in the region of 0.5100 against a broadly softer Pound, the currency came under pressure as the People’s Bank of China weakened the Yuan by the most in six weeks, resulting in a decline in China’s stocks.
With volatility returning to the market, the Australian Dollar failed to benefit following the release of another disappointing US ecostat, the nation’s Consumer Confidence Index.
This morning Australia’s Wage Cost Index for the fourth quarter is believed to have held at 2.3% on the year, while Construction Work done in the period dipped -2.0%. Surprising results could inspire AUD movement. Investors will also be taking an interest in China’s Westpac-MNI Consumer Sentiment gauge.
Sterling
After plummeting to a succession of multi-year and multi-month lows against its major rivals on Monday, demand for the Pound remained limited as the week continued.
Sterling extended declines against a number of its peers as the Bank of England (BoE) poured cold water on UK rate hike expectations by refusing to deny that a rate cut might be introduced at some point this year.
During his testimony to lawmakers, BoE Governor Mark Carney asserted that the central bank had the scope to loosen monetary policy if necessary. This, coming so soon after Boris Johnson announced his support for the ‘Leave’ camp in the EU referendum campaign, left the Pound in fairly dire straits.
With ‘Brexit’ concerns and rate hike bets dominating Sterling sentiment, neither of today’s UK reports (the BBA Loans for House Purchase and CBI Reported Sales figures) are likely to help Sterling recoup recent losses even if they come in higher than forecast.
Euro
On Tuesday the AUD/EUR exchange rate prepared to close out the European session down slightly on the day’s opening levels.
A reduction in risk appetite saw the Australian Dollar slip against the Euro even as reports from Germany fell short. While seasonally adjusted annual German GDP printed at 1.3% in the fourth quarter, as expected, the IFO Business Climate and Expectations indexes for February dropped by more than expected.
Ecostats for the Eurozone are now lacking until Thursday, when Germany’s Import Price Index and GfK Consumer Confidence Survey are scheduled for release. The Eurozone is also set to publish final inflation figures for January – any revisions to the CPI results could trigger EUR movement.
US Dollar
Although the US Dollar benefited from a spate of risk aversion, the ‘Greenback’s gains were limited as investors processed the latest less-than-encouraging economic report for the US.
The nation’s Consumer Confidence Index dropped from 98.1 in January to 92.2 in February, a much lower result than the 97.3 forecast. Additionally, the US Richmond Fed Manufacturing Index slid from 2 to -4 in February.
The data weighed on US rate hike expectations and helped the Australian Dollar remain close to a two-month high against its North American counterpart.
The upcoming US MBA Mortgage Applications report is a fairly low-impact release and subsequently unlikely to have a significant impact on USD trading.
Canadian Dollar
Ahead of Thursday’s speech by a Bank of Canada (BOC) official, oil prices and market sentiment were the main causes of CAD exchange rate volatility.
The price of Canada’s main commodity dropped on Tuesday as investors remained dubious about the effectiveness of the proposed cap on oil production and the ‘Loonie’ softened accordingly.
New Zealand Dollar
Sub-par US manufacturing data sent the New Zealand Dollar trending higher earlier in the week but developments in China – and their impact on stock and commodity markets – saw NZD reverse some of its advance on Tuesday. The AUD/NZD exchange rate climbed almost 0.5% before the close of European trading.
New Zealand’s next notable ecostat, domestic trade figures, may weaken NZD if the trade deficit widens as expected.
Data Released
Feb 24th 11:00 AUD Wage Cost Index (YoY) (4Q)
Feb 24th 12:45 CNY Westpac-MNI Consumer Sentiment
Feb 24th 20:30 GBP BBA Loans for House Purchase (JAN)
Feb 24th 22:00 GBP CBI Reported Sales
Feb 24th 23:00 USD MBA Mortgage Applications (FEB 19)