Australian Dollar
With the US Dollar still struggling in the wake of Federal Reserve Chairwoman Janet Yellen’s fairly dovish interest rate related remarks, the Australian Dollar was able to advance above 0.77 and hit its highest level since July 2015.
The decline in US interest rate hike expectations and the ‘Aussie’s recent bullish run have encouraged the Commonwealth Bank of Australia to upgrade its AUD forecasts, with the institution now offering a year-end target of 0.78 – significantly higher than its previous forecast of 0.70.
The ‘Aussie’ fluctuated around the 0.77 level on Thursday but was unable to achieve fresh highs despite the publication of several positive Australian reports, including a higher Activity Outlook for March and stronger-than-anticipated Private Sector Credit figures for February.
Falling US rate hike expectations have also helped the Australian Dollar gain on the Pound, with AUD/GBP advancing 0.6% during Thursday’s European session.
The run of Australian, Chinese and US reports scheduled for release today may prompt a flurry of AUD movement. If China’s Manufacturing PMI fails to show the improvement expected the ‘Aussie’s bullish run could end. However, if the highly influential US Non-Farm Payrolls report gives investors cause to push back US rate hike expectations even further the Australian Dollar could hit fresh highs. Australian reports to focus on include the AiG Performance of Manufacturing Index and Commodity Index.
Sterling
Concerns relating to the UK’s steel industry prevented the Pound from deriving any benefit from comparatively positive domestic ecostats on Thursday.
The nation’s GfK Consumer Confidence survey printed at 0 in March, unchanged from February and a slightly better result than the -1 figure anticipated.
Although UK Mortgage Approvals declined in February and Total Business Investment eased in the fourth quarter, the UK’s final growth figures for the last quarter of 2015 provided a pleasant surprise. GDP was shown to have increased by 0.6% on the quarter rather than the 0.5% initially estimated. This took the annual figure from 1.9% to 2.1%.
Sterling held declines against its higher-risk peers after the data was released as investors chose to focus on the US and the reduced odds of interest rates being adjusted twice in 2016.
UK House Price and Manufacturing reports are due out in the hours ahead. If the UK’s Markit Manufacturing PMI improves from 50.8 to 51.2 in March (as economists expect to be the case) the Pound could enjoy a modest uptrend before the weekend.
Euro
Although the Australian Dollar was riding high against most of its major peers thanks to the risk-on trading environment, AUD/EUR remained static as demand for the Euro was bolstered by positive developments in the Eurozone.
German retail sales and employment figures were slightly disappointing, but the currency bloc’s estimated inflation figures for March gave the Euro a boost.
The non-core measure of annual inflation improved from -0.2% to -0.1%, as forecast, but the core gauge exceeded expectations by advancing from 0.8% to 1.0%.
As rising inflation may prevent the European Central Bank (ECB) from deploying additional stimulus, the Euro advanced on the majority of its currency counterparts and managed to cling to the day’s opening levels against the ‘Aussie’. Today’s final Manufacturing PMIs for the Eurozone and its largest economies are unlikely to have much of an impact unless they differ from the initial figures. Similarly, the Eurozone’s unemployment report is only likely to move the common currency if the jobless rate prints above or below 10.3%.
US Dollar
After Federal Reserve Chairwoman Janet Yellen indicated that the Fed will be taking a ‘slow and steady’ approach to increasing interest rates the US Dollar fell across the board.
With the prospect of US borrowing costs remaining low for longer triggering a spike in risk appetite, the Australian Dollar was able to firm to 0.77 against its US peer – a new multi-month high.
The AUD/USD exchange rate remained higher as US initial jobless claims came in at 276k rather than the 265k forecast. However, the US Dollar could bounce back before the weekend depending on the strength of the latest US Non-Farm Payrolls report.
The US economy is believed to have added 210k positions in March, less than added in February but still a strong employment gain. If this forecast proves accurate it could lend support to arguments in favour of an April rate adjustment from the Fed and inspire a USD rebound.
Conversely, a smaller-than-expected jobs gain or an easing in average earnings would be beneficial for higher risk currencies and could push the ‘Aussie’ to new highs.
Canadian Dollar
Better-than-forecast Canadian growth data sent the ‘Loonie’ higher across the board on Thursday. On the month the Canadian economy was shown to have expanded by 0.6% in January, beating forecasts for growth of 0.3%. The annual rate of expansion of 1.5% was up notably from December’s positively revised figure of 0.6% and a decidedly better result than the 1.1% growth rate projected.
The AUD/CAD exchange rate hit a low of 0.9893 after the report was published. Seesawing oil prices did limit the Canadian Dollar’s gains slightly and with only Canadian manufacturing data due before the weekend, commodity prices are likely to be the main cause of additional CAD shifts.
New Zealand Dollar
The New Zealand Dollar was one of the few currencies to best the bullish ‘Aussie’ on Thursday, with AUD/NZD dipping slightly before the close of the European session.
The ‘Kiwi’ consolidated earlier gains despite a dip in the NBNZ Business Confidence measure for March. The index slid from 7.1 to 3.2.
Ecostats for New Zealand are thin on the ground until next week but if investors start to focus on the likely result of the next dairy auction, NZD could shed some of its recent gains.
Data Released
April 1st 09:30 AUD AiG Performance of Manufacturing Index (MAR)
April 1st 12:00 CNY Manufacturing PMI (MAR) 49.3
April 1st 12:00 CNY Non-manufacturing PMI (MAR)
April 1st 19:30 GBP Markit UK PMI Manufacturing s.a. (MAR) 51.2
April 1st 20:00 EUR Eurozone Unemployment Rate (FEB) 10.3%
April 1st 23:30 USD Unemployment Rate (MAR) 4.9%
April 1st 23:30 USD Change in Non-farm Payrolls (MAR) 210k