Australian Dollar
Robust domestic growth data gave the ‘Aussie’ a lift on Wednesday and sent the currency trending higher against the US Dollar, Pound and Euro.
Recent Australian ecostats have been patchy at best and economists had been primed for a quarterly growth print of 0.4% and annual GDP of 2.5%. The actual results of 0.6% and 3.0% were therefore a positive surprise and resulted in the Australian Dollar advancing.
The ‘Aussie’ largely held gains throughout the European session and was able to take advantage of weakness in the Euro and US Dollar. Gains against the Pound were more limited however as the British currency staged something of a rebound.
With two notable Australian reports set for publication (the AiG Performance of Service Index for Feb and trade balance numbers) and China also scheduled to release its Services and Composite PMI’s, we can expect further AUD movement in the hours ahead.
Sterling
After hitting a 9-year low against the US Dollar, 16-month low against the Euro and 9-month lows against both the Australian Dollar and New Zealand Dollar at the height of last week’s ‘Brexit’ uncertainty, correctional trading and profit taking have helped the Pound recover losses over the course of this week.
A number of reports highlighting the potential negative implications of a ‘Brexit’ were also seen to bolster the chances of Briton’s voting to remain part of the European Union, lending the Pound support in the process.
The Pound shrugged off the impact of a disappointing UK Construction PMI report and was little effected by non-policy-related comments from two Bank of England (BoE) officials. If tomorrow’s UK Services PMI shows a weakening in the sector responsible for contributing the most to total domestic GDP we could see Sterling come under renewed pressure. Conversely, an above-forecast print would be Pound supportive.
Euro
The Euro spent Wednesday’s European session softening across the board as investors responded to recent remarks from European Central Bank (ECB) President Mario Draghi. Once again, Draghi was keen to highlight that the central bank is willing to use any of the tools at its disposal in order to boost the Eurozone’s economy.
His comments were followed by a statement from Benoit Coeure, an ECB Executive Board Member. Coeure indicating that Eurozone banks are able to deal with ultra-low interest rates, indicating that the central bank is prepared to cut rates further.
As well as falling by over 1.2% against the Australian Dollar, the Euro dipped against the Pound and US Dollar.
Final Services/Composite PMI’s for the Eurozone and its largest economies could encourage Euro fluctuations today if they differ from initial estimates. The Eurozone’s retail sales report will also be of interest.
US Dollar
With key US officials advocating the case in favour of US interest rates remaining lower for longer, the US Dollar was struggling against most of its peers by the middle of the week.
The fact that the US manufacturing sector was shown to have remained in contraction territory in February also kept the ‘Greenback’ under pressure and helped the Australian Dollar recover the 0.72 level.
The US Dollar’s mixed performance continued even as the ADP Employment Change report showed that the economy added more positions than forecast in February. We could see USD fight back against AUD before the weekend if the week’s other major US reports, Services PMIs, Factory Orders, Durable Goods Orders and Non-Farm Payrolls, exceed forecasts.
Canadian Dollar
Although oil prices hit a two-month high on Wednesday, concerns that the Canadian Dollar may have rallied too far, too fast, saw CAD drop against rivals like the Pound, Euro and US Dollar.
With influential Canadian data lacking over the next couple of days, further ‘Loonie’ movement will be the result of market sentiment.
New Zealand Dollar
The news that the price of New Zealand’s key commodity, dairy produce, rose at the latest auction sent the ‘Kiwi’ trending higher and the South Pacific currency was little affected by a dip in domestic house prices.
NZD/AUD lost over 1% however as the Australian Dollar continued to benefit from the upbeat Australian growth report.
Data Released
March 3rd 09:30 AUD AUD AiG Performance of Service Index (FEB)
March 3rd 11:30 AUD AUD Trade Balance (Australian Dollar) (JAN)
March 3rd 12:45 CNY CNY Caixin China PMI Services (FEB)
March 3rd 20:30 GBP GBP Markit/CIPS UK Services PMI (FEB)
March 3rd 21:00 EUR EUR Euro-Zone Retail Sales (YoY) (JAN)