Australian Dollar
Friday’s mixed US employment data sent higher-risk currencies like the Australian Dollar surging and AUD registered notable gains against peers like the Pound, Euro and US Dollar.
Although the US economy was shown to have added more positions than anticipated, a dip in average earnings was seen to support the case in favour of the Federal Reserve opting to leave interest rates on hold for the foreseeable future.
As a new week of trading began the Australian Dollar’s rally paused and the currency registered modest declines. The US Dollar’s recovery was partly responsible for the ‘Aussie’ blip but the currency also came under pressure from disappointing domestic data and concerns that recent AUD strength might push the Reserve Bank of Australia (RBA) into cutting interest rates in the near future.
Australia’s AiG Performance of Construction Index edged from 46.3 to 46.1 in February while Job Advertisements fell -1.2% on the month and Foreign Reserves declined.
Demand for the Australian Dollar is likely to fluctuate in response to a speech due to be given by RBA Deputy Governor Phillip Lowe. Any references to fiscal policy could prove influential.
Sterling
Last week’s trio of disappointing UK PMI figures contributed to the Pound’s slide to a ten-month low against the Australian Dollar. Although UK data was lacking at the start of this week, demand for Sterling remained limited as the Director General of the British Chambers of Commerce (BCC) resigned his post following the backlash to his decision to support a ‘Brexit’.
Today’s Like-for-Like sales figure from the British Retail Consortium could weigh on the Pound if it prints at or below the 0.5% annual figure forecast.
Investors with an interest in the AUD/GBP exchange rate will also be on the lookout for any developments related to the EU referendum.
Euro
Euro movement was limited on Monday despite ecostats for the Eurozone supporting the introduction of additional stimulus at this week’s European Central Bank (ECB) policy meeting.
German Factory Order figures were slightly better-than-anticipated but still detailed a -0.1% month-on-month decline. Meanwhile, the Eurozone’s Sentix Investor Confidence measure for March dropped from 6.0 to 5.5 instead of improving to 8.3 as expected.
Investors are likely to take a cautious approach to the Euro ahead of Thursday’s ECB announcement. While the introduction of aggressive easing measures would weigh on the common currency, a more muted approach from ECB President Mario Draghi could trigger a EUR uptrend.
German Industrial Production and Eurozone growth data could spark AUD/EUR movement in the hours ahead.
US Dollar
Before North American markets closed for the weekend, the US Dollar registered notable losses against the majority of its peers. An unexpected drop in average earnings weighed on Federal Reserve rate hike expectations and limited the ‘Greenback’s appeal in the process.
With the US Dollar softened and the Australian Dollar enjoying a bullish run, the AUD/USD pairing was able to hold above the 0.74 level. The pairing experienced restricted movement prior to speeches from two key Federal Reserve officials.
Canadian Dollar
Despite oil prices rallying to a three-month high, the Canadian Dollar remained trending lower against its Australian peer. Concerns that the current spike in the value of black gold will prove short lived took a toll on the ‘Loonie’, as did speculation relating to this week’s Bank of Canada (BOC) interest rate decision. Canadian data is in short supply until Wednesday, when the nation’s Housing Starts and Building Permits figures are due to be published.
New Zealand Dollar
With the Reserve Bank of New Zealand (RBNZ) interest rate decision looming, the New Zealand Dollar tumbled by almost 1% against its Australian counterpart.
Ahead of the key policy announcement, New Zealand’s Manufacturing Activity report could have an impact on NZD trading.
Data Released
March 8th 08:45 NZD Manufacturing Activity (4Q)
March 8th 10:20 AUD RBA’s Lowe Speech In Adelaide
March 8th 11:01 GBP BRC Sales Like-For-Like (FEB)
March 8th 11:30 AUD NAB Business Conditions (FEB)
March 8th 18:00 EUR German Industrial Production (JAN)
March 8th 21:00 EUR Eurozone GDP (4Q) 1.5%