Australian Dollar
The Australian Dollar hit an over two-month high against the US Dollar at the close of last week and continued its bullish run against a number of its other major peers. Demand for the ‘Aussie’ remained high despite domestic retail sales data coming in slightly below forecasts.
AUD/USD was able to consolidate gains following the publication of the US Non-Farm Payrolls report. Although the US was shown to have added a greater-than-expected number of positions in February, average earnings declined. Given that the report is unlikely to encourage the Federal Reserve to bring forward its current timeline for increasing interest rates, the US Dollar softened in the wake of the its release.
This week the Australian Dollar could push higher still if domestic data, including the AiG Performance of Construction Index, NAB Business Conditions report, Westpac Confidence gauge and Consumer Inflation Expectation impress. However, China is also set to publish a plethora of figures and notable reports, like the nation’s consumer/producer price indexes, may weigh on the ‘Aussie’ if they provide cause for concern.
Sterling
While profit taking helped the Pound gain on a number of its rivals last week, the British currency failed to firm against the ‘Aussie’ as a trio of sub-par UK PMI reports indicated that UK growth may have slowed in the first quarter of 2016.
If fresh ‘Brexit’ concerns emerge the AUD/GBP exchange rate is likely to push higher, but investors with an interest in the pairing will also be focusing on the UK’s industrial/manufacturing production figures and NIESR GDP estimate. Should upcoming UK reports exacerbate slowdown fears, new multi-month Pound lows could be on the horizon.
Euro
At the close of last week the AUD/EUR exchange rate was trending in the region of 0.6730 and the pairing is likely to remain in a position of strength ahead of the European Central Bank’s (ECB) latest interest rate decision. Although the central bank taking some form of action is largely expected and priced into the market to a certain extent, if the ECB opts to both cut interest rates and expand quantitative easing, a Euro downtrend is likely to be the result.
AUD/EUR exchange rate trading will also feel the effects of today’s German Factory Order data and Eurozone Sentix Investor Confidence report.
US Dollar
Although economist Michael Feroli stated that the latest US Non-Farm Payrolls report ‘indicates the resilience of the economy’, he added that ‘Wages were a bit disappointing.’ And it is this disappointment in wage growth that the Federal Reserve is likely to fixate on at its next policy gathering.
With average earnings down, a rate increase this side of summer looks highly unlikely. If this week’s US reports keep Fed rate hike expectations depressed, AUD/USD has the potential to achieve new multi-month highs.
Canadian Dollar
Canada’s Ivey Purchasing Managers Index provided cause for concern at the close of last week, by falling from 66 to 53.4 instead of coming in at 58 as expected.
With the Bank of Canada’s (BOC) interest rate decision looming, any less-than-impressive data releases are liable to exert greater downward pressure on the ‘Loonie’ than they might usually. AUD/CAD prepared to close out last week trading in the region of 0.9900.
New Zealand Dollar
Like the Australian Dollar, the New Zealand Dollar benefited from the not entirely positive US Non-Farm Payrolls report, with the commodity-driven currency surging across the board.
The ‘Kiwi’ could be on course to reverse gains this week however if the Reserve Bank of New Zealand (RBNZ) delivers a particularly dovish interest rate announcement on Thursday.
Data Released
March 7th 09:30 AUD AiG Performance of Construction Index (FEB)
March 7th 18:00 EUR German Factory Orders
March 7th 20:30 EUR Eurozone Sentix Investor Confidence
March 8th CNY Trade Balance
March 8th 02:00 USD Labour Market Conditions Index Change