Australian Dollar
Investor sentiment was seriously weakened on Monday as the world’s media got to grips with the ‘Panama Papers’. The biggest data leak in history, comprising some 11.5 million documents belonging to Panamanian law firm Mossack Fonseca, has implemented many senior world leaders and political figures in tax avoidance schemes and questionable financial practices.
The Australian Tax Authority has already begun investigations into some of the 800 taxpayers whom it has identified in the data. Numerous countries around the world have been suggested as potential tax havens, weakening investor sentiment across the globe.
A commodity slide severely weakened the Australian Dollar yesterday, with the international benchmark oil, Brent Crude, falling further below the key US$40 per barrel mark and global commodity indices also falling. Iron ore remained strong, but a trading suspension in shares for mining company Arrium Ltd highlighted the tough conditions in the industry.
The latest domestic data didn’t help the Australian Dollar’s weakened state, with retail sales figures showing no growth in February instead of the 0.4% anticipated. Today’s interest rate decision by the Reserve Bank of Australia (RBA) is likely to keep ‘Aussie’ sentiment weak, at least until traders learn of the RBA’s economic outlook.
Sterling
With the Pound already in a weakened state, the ‘Panama Papers’ had little impact, despite British-administrated territories making up over half the list of tax havens. With other currencies weakened by the news, Pound Sterling was actually able to make a strong recovery. Positive construction figures from the Markit/CIPS Construction PMI for March helped push the UK asset into a bullish uptrend. A -0.1 point decline had been predicted, but the index held steady at 54.2.
UK services and the composite PMI are due for release today and are both expected to show a strong acceleration in growth.
Euro
Fresh disagreements between Greece’s creditors have thrown the Hellenic nation’s future bailouts into doubt. A leaked recording of a private phone call between officials at the International Monetary Fund (IMF) has seen commentators accusing the fund of trying to push Greece toward defaulting on its debts. Christine Lagarde, IMF Chief, strongly denied that this was the case, but speculation over whether decisions on Greece’s financial future will be made in time nonetheless weakened the Euro yesterday.
The common currency still managed to make strong progress verses the commodity currencies thanks to the drop in prices. German Factory Orders and Eurozone Retail Sales for February are the most influential among a slew of data releases today.
US Dollar
After a strong start, the US Dollar quickly lost ground despite a rout in commodity currencies which should have boosted safe-haven demand. Comments from Donald Trump, published over the weekend, didn’t help investor sentiment. The businessman and presidential candidate claimed that the US was on the edge of a ‘very massive recession’, although economists quickly dismissed his claims and criticised the data he used to justify his bearishness.
Speeches from two Fed officials, Neel Kashkari and Charles Evans, could move the US Dollar today.
Canadian Dollar
A further decline in Brent Crude weakened the Canadian Dollar yesterday, with the international benchmark slipping closer to US$38 per barrel. Sentiment towards the ‘Loonie’ remained weak, despite positive news from the Organisation of Petroleum Exporting Countries (OPEC). After seemingly failing to get Iran to agree to a production freeze, Saudi Arabia has resorted to more direct means to curtail production by placing a ban upon vessels transporting Iranian crude oil entering their waters.
The only data due today for Canada is the low-impact International Merchandise Trade figure for February.
New Zealand Dollar
Appetite for the New Zealand Dollar was severely curtailed after New Zealand was named in the leaked ‘Panama Papers’, causing many to question whether the country was serving as a tax haven. Government officials scrambled to deny such a thing, but the damage had already been done to the country’s reputation and the ‘Kiwi’ plummeted as a result.
Today’s GlobalDairyTrade auction will be the main driver of New Zealand Dollar movement. Another fall in dairy prices will extend yesterday’s bearish performance, while an uptick could spark a ‘Kiwi’ recovery.
Data Released
April 5th 14.00 NZD Dairy Auction Whole Milk Powder MT (APR 5)
April 5th 14.00 NZD Dairy Auction Avg. Winning Price MT (APR 5)
April 5th 14.30 AUD Reserve Bank of Australia Rate Decision (APR 5) 2.00%
April 5th 16.00 EUR German Factory Orders n.s.a. (YoY) (FEB) 2.2%
April 5th 18.30 GBP Markit/CIPS UK Services PMI (MAR) 53.5
April 5th 18.30 GBP Markit/CIPS UK Composite PMI (MAR) 53.4
April 5th 19.00 EUR Euro-Zone Retail Sales (YoY) (FEB) 1.9%
April 5th 22.30 USD Trade Balance (FEB) -$46.2b