Australian Dollar
After rallying in response to upbeat domestic growth data, the Australian Dollar’s bullish run continued on Thursday, with the currency extending gains against peers like the Pound and Euro and consolidating its position above 0.73 against the US Dollar.
China’s latest services data may have been unimpressive but the ‘Aussie’ wasn’t fazed and investors were cheered by the fact that Australia’s trade deficit narrowed by more-than-expected while the AiG Performance of Services Index returned to growth territory by rising from 48.4 to 51.8 in February.
As long as Australian data continues to outperform forecasts and US rate hike expectations remain depressed, AUD’s bullish trend could persist.
Sterling
A dismal UK Services PMI rounded off a week of less-than-impressive domestic reports and sent the Pound on something of a downtrend against several of its most-traded peers during the European session. Sterling trimmed previous gains against the Euro and consolidated losses against the Australian and New Zealand Dollars as the services gauge unexpectedly slipped from 55.6 to 52.7.
The data prompted this response from Markit economist Chris Williamson; ‘The slowdown in February leaves the PMI surveys suggesting that economic growth could weaken to 0.3% in the first quarter, but there are downside risks to even this modest expansion.’
The Pound’s gains weren’t as extensive as they might have been as profit taking continued in the wake of currency’s recent notable lows. With no high-profile UK releases due for publication before the weekend, ‘Brexit’ news is likely to be the main cause of GBP fluctuations.
Euro
With next week’s European Central Bank (ECB) policy meeting at the forefront of investor’s minds, the Euro failed to derive much benefit from positive revisions to services PMIs for some the Eurozone’s largest economies on Thursday. The Euro also remained trending lower against the Australian Dollar as retail sales growth in the currency bloc exceeded expectations.
The AUD/EUR exchange rate hit a high of 0.6744 on Thursday and could push higher if Eurozone and German Retail PMIs remain in contraction territory. If the ECB does opt to expand stimulus in line with market expectations next week, substantial Euro losses could be on the horizon.
US Dollar
US Dollar weakness continued on Thursday as the prospect of US interest rates remaining on hold for the foreseeable future dented the ‘Greenback’s appeal. Mixed US data failed to reassure investors that the Fed’s dovish stance might change at the next policy gathering and AUD/USD pushed all the way to 0.7360
Both initial and continuing jobless claims were worse-than-expected, while Markit’s Services PMI dipped further below the contraction benchmark rather than rising to 50 as initially anticipated. The ISM Non-Manufacturing/Services measure was more optimistic than forecast, only slipping slightly to 53.4, but Factory Orders failed to increase by as much as hoped and the gain in Durable Goods Orders was negatively revised from previous estimates.
Given the importance the Fed places on US employment figures, the weekend’s US Non-Farm Payrolls stat could see USD recover ground if it outlines a sturdy increase in employment.
Canadian Dollar
Oil prices might have hit a two-month high earlier in the week on hopes the market had bottomed out, but the value of ‘black gold’ soon began to retreat again as investors grew wary of the impact of swelling US inventories.
The Canadian Dollar followed the value of its key commodity lower on Thursday and posted declines against most of its counterparts.
New Zealand Dollar
The New Zealand Dollar surged across the board as the end of the week approached. The only currency NZD failed to advance on was the bullish ‘Aussie’. Support for the ‘Kiwi’ came in the form of the ANZ Commodity Price Index, which increased by 0.4% in February following a -2.3% decline in January.
Data Released
March 4th 11:30 AUD Retail Sales s.a. (MoM) (JAN)
March 4th 19:30 EUR Markit German Construction PMI (FEB)
March 4th 20:00 GBP New Car Registrations (FEB)
March 4th 20:10 EUR Markit Germany Retail PMI (FEB)
March 4th 20:10 EUR Markit Eurozone Retail PMI (FEB)