Australian Dollar
Anticipation of a positive result from the US Consumer Confidence index kept demand for the high-yield Australian Dollar cold yesterday, with the ‘Aussie’ deep in negative territory against several of the majors. The weakness was further compounded after Federal Reserve official John Williams gave an upbeat assessment of the US economy and urged the Fed to continue with its rate hiking cycle.
Williams, who has been consistently hawkish over the past few months, claimed yesterday that the Fed should not be distracted by global economic weakness, believing that the US economy was resilient enough to withstand stronger rates.
In domestic news, a group of experts raised concerns after describing Australia’s budget deficits as ‘alarming’ for a country which has enjoyed nearly 25 years without a recession. The Committee for Economic Development of Australia (CEDA) have released proposals which could create a budget surplus by the 2019 fiscal year. The Australian government has run a budget deficit for the past eight years and has plans to remain in deficit for another four.
The ANZ Roy Morgan Consumer Confidence Index is due out soon.
Sterling
The Bank of England (BoE) was drawn into the ‘Brexit’ debate again after the Financial Policy Committee (FPC) released a statement predicting that breaking away from the European Union could trigger a credit crunch. Pro-EU campaigners were eager to seize upon the FPC’s warnings as evidence to support their cause, while ‘Brexit’ supporters have accused the BoE of bias.
The news came just as a new poll commissioned by the Evening Standard from survey compiler Ipsos showed that the EU referendum vote has closed to within 2% when adjusted for voter turnout. The ‘Remain’ campaign currently leads 48% to 46%. The poll also showed that more than half of the British public believe that Prime Minister David Cameron should resign if Britain votes to leave the European Union.
There is no UK data due today, although yesterday’s ‘Brexit’ developments could continue weighing on Pound Sterling.
Euro
The Euro remained soft yesterday as investors awaited a speech by US Federal Reserve Chair Janet Yellen. With expectations that Yellen would drop hints regarding the first interest rate hike of 2016, the Euro was soft on the prospect of widening policy divergence between the US and the Eurozone.
Today will be a busy day for Eurozone data, with leading economic confidence survey scores for the industrial and services industries, as well as consumer and overall business confidence figures. Also due for release are the preliminary German Consumer Price Index figures for March, which are expected to show a monthly increase from 0.4% to 0.6% and a year-on-year (YoY) rise of 0.1%.
US Dollar
Despite a better-than-expected result from the US Consumer Confidence survey and upbeat comments from Federal Reserve official John Williams, the US Dollar weakened yesterday afternoon after a strong morning of advances.
The eagerly awaited Consumer Confidence score for March saw significant growth, jumping from 92.2 to 96.2, past the 94.0 mark predicted. Meanwhile, Williams reasserted his view that the US economy remained strong while speaking in Singapore.
With the first key release out of the way, attention turned to the afternoon’s speech from Janet Yellen, softening demand for the US Dollar in the meantime as investors awaited her comments.
Mortgage application and ADP employment change figures for March are due out at the end of the day.
Canadian Dollar
Yesterday saw a mixed performance from the Canadian Dollar, which remained weak overall thanks to the continued slide away from US$40 per barrel of Brent Crude oil. Little economic data was available to provide support, with the only figures showing a -1.1% drop in Industrial Product Prices and a -2.6% decline in the Raw Materials Price Index.
Like the Euro, the Canadian Dollar was also suffering from a lack of appetite in the run up to Janet Yellen’s speech. Increased US interest rates will raise the value of the US Dollar, making cross border trade more expensive for Canadian exporters.
New Zealand Dollar
The New Zealand Dollar entered a bullish uptrend yesterday after the US Consumer Confidence index results, despite a lack of supportive domestic data. Building Permits are due out this morning and after that data for New Zealand is relatively thin on the ground.
Data Released
March 30th 09.30 AUD ANZ Roy Morgan Weekly Consumer Confidence Index (MAR 27)
March 30th 22.00 USD MBA Mortgage Applications (MAR 25)
March 30th 23.00 EUR German Consumer Price Index (MoM) (MAR P) 0.6%
March 30th 23.00 EUR EUR German Consumer Price Index (YoY) (MAR P) 0.1%
March 30th 23.15 USD USD ADP Employment Change (MAR) 195k