Australian Dollar
A recovering US Dollar and several domestic developments saw the Australian Dollar slide verses the majors yesterday. The Australian government is battling its own steel industry crisis with mining company Arrium announcing plans to enter voluntary administration. The plant, which employs thousads of workers, is based in South Australia, a region which has already been hit by the news that car manufacturer Holden will leave the country in 2017, making 2900 employees redundant.
In further bleak news for the Australian economy, sources close to the matter revealed that the government may sell state-owned shipbuilder ASC Pty Ltd. The move, which comes ahead of a plan to spend AU$90 billion on expanding the Australian navy, is being considered to help the government raise funds, with the potential privatisation of public welfare and health payments another option for rebuilding depleted government resources.
Two high-profile industry crises and the selling of state assets to raise funds did not improve investor appetite, which was already low thanks to the strengthening of the US Dollar. The prospect of a further strengthening US Dollar could weaken the ‘Aussie’ today.
Sterling
Yesterday’s low-impact UK data was largely ignored as a new row broke out over the ‘Brexit’. The UK government sparked fury after revealing it intended to spend £9 million of taxpayers’ money on a leaflet defending the UK’s membership of the EU.
‘Brexiters’ lambasted the campaign, with many calling it ‘propaganda’, while others argued that the government’s involvement as an unregistered participant in the referendum was unfair and illegal. Several government officials, including David Cameron, defended the move, with the Prime Minister claiming that it was important the government set out its stance ahead of the referendum.
Industrial and manufacturing production ecostats are due today, along with trade figures. These releases usually cause significant movement, but with the Pound already buffeted by high profile political events, it remains to be seen if the data will draw much focus from the raging debates.
Euro
With the exception of some bullish performances verses currencies including the Australian Dollar, the Euro suffered yesterday. Just a few weeks after European Central Bank (ECB) President Mario Draghi caused the Euro to skyrocket by suggesting monetary easing was at an end, stimulus bets are back on the table.
Comments made yesterday by the ECB’s Chief Economist, Peter Praet, that there is more the ECB could do to combat low inflation saw the Euro tumble.
All of today’s Eurozone data revolves around German trade balance figures, which are expected to show a sizable increase in the trade surplus. This could help the Euro to recover, unless fears of more stimulus overshadow the potentially positive result.
US Dollar
The latest Federal Open Market Committee (FOMC) meeting minutes, released yesterday, revealed that US policymakers were split on the best path for future monetary policy. The US Dollar softened initially, but traders were reassured by comments from several officials, including Robert Kaplan. The Dallas Fed President said that, while caution was necessary, the FOMC should press ahead with gradual, sustained hikes over the coming month.
Positive data helped buoy the US Dollar, with the ‘Greenback’ eventually trending bullishly. Initial Jobless Claims figures printed below expectations, remaining below the threshold considered healthy for the economy for the 57th week.
Federal Reserve Chair Janet Yellen is due to make another public appearance tomorrow, which is likely to provoke significant movement for the US Dollar.
Canadian Dollar
Mixed data saw the Canadian Dollar putting on an incoherent performance yesterday, with the currency making bullish gains against the Australian Dollar and enjoying a strong rise verses the New Zealand Dollar, but slipping verses other majors.
The Ivey Purchasing Managers Index for March rose from 53.4 to a seasonally-adjusted 57.9, while Building Permits figures leapt up 15.5% in February after January’s -9.8% decline.
Today is a key data day for Canada, with the important Unemployment Rate and Net Change in Employment figures for March accompanied by Housing Starts and Full Time Employment Change figures.
New Zealand Dollar
Yesterday’s sole data release for New Zealand, the ANZ Truckometer Heavy, showed accelerated growth of 2.5% after the previous upwardly revised 1.7% reading. The price of milk also rose in response to the latest positive news from the GlobalDairyTrade auction.
However, a strengthening US Dollar weakened the ‘Kiwi’, pushing it deep into negative territory against the majors, with the exception of the Australian Dollar. There is no New Zealand data due today, however with a speech from Fed Chair Janet Yellen on the itinerary the ‘Kiwi’ could strengthen or weaken as markets respond to her comments.
Data Released
8th April 07.30 USD Fed’s Yellen in New York, with Greenspan, Bernanke and Volcker
8th April 16.00 EUR German Trade Balance (euros) (FEB) 18.0b
8th April 18.30 GBP Industrial Production (YoY) (FEB) 0.0%
8th April 18.30 GBP Manufacturing Production (YoY) (FEB) -0.7%
8th April 22.30 CAD Unemployment Rate (MAR) 7.3%
8th April 22.30 CAD Net Change in Employment (MAR) 10.0k