Australian Dollar
A slew of positive data helped the Australian Dollar trend bullishly yesterday, with the currency aided by weak US Dollar sentiment and strong commodity prices. Although figures showed that consumer confidence took a hit last week, Australia’s data docket was overwhelmingly positive.
Credit card balances and purchases both rose in February, while the NAB Business Conditions index climbed 4 points to 12 in March and the Business Confidence index recovered from 3 to 6. A strong recovery in crude oil, combined with a 2.5% increase in iron ore prices to US$55.05 per metric tonne, helped increase ‘Aussie’ bullishness.
Chinese trade figures are likely to have an impact upon the Australian Dollar today, while the morning’s Westpac Consumer Confidence index for April could also move the ‘Aussie’.
Sterling
The Pound was sent into a bullish charge by strong UK inflation data but heightened risk appetite saw it deep in negative territory verses the ‘Aussie’. Core inflation rose 1.5% on the year while non-core inflation saw a 0.5% increase, in both cases bettering forecasts.
The positive data saw many speculating that the Bank of England (BoE) may raise interest rates earlier than 2020 as markets currently anticipate. While few believe this Thursday’s meeting will now result in a rate hike, today’s data could see several BoE forecasts being positively revised, a development which would strengthen sentiment towards the Pound.
Today is completely devoid of any UK data, although speculation over the BoE rate hike and the continuing steel industry crisis are likely to generate movement for Pound Sterling.
Euro
The International Monetary Fund’s (IMF) latest World Economic Outlook significantly weakened several of the majors yesterday. The IMF cut its growth outlook for the Eurozone from 1.7% in 2016 and 2017 to 1.5% and 1.6% respectively.
Of particular detriment to Euro strength was the prediction that Eurozone monetary policy needed to remain loose for some time to come. The IMF also claimed the ECB ‘should continue to signal strongly its willingness to use all available instruments until its price stability objective is met.’
As a result, the Euro sank verses the majors, with losses verses the Australian Dollar extending to -1%.
Eurozone industrial production data is due out later today and is expected to show a serious slowing on the year and a decline on the month, results which could weaken the Euro.
US Dollar
The US Dollar slumped against the Australian Dollar yesterday after the IMF report confirmed investor fears that global growth was expected to slow. The IMF cut its outlook for world GDP to 3.2%, a -0.2% reduction. With the Fed now thought to be paying greater heed to global developments than domestic ones, the weaker outlook saw the likelihood of a rate hike fall, despite the internal strength of the US economy.
Falling business confidence further weakened the US Dollar, with optimism among small businesses sliding to a two-year low.
Speeches from the Fed’s John Williams and Jeffery Lacker could move the US Dollar this morning, before this evening’s Advance Retail Sales figures cause significant volatility.
Canadian Dollar
The Canadian Dollar put on a mixed performance yesterday, losing out to bullish currencies such as the Australian Dollar and the New Zealand Dollar, but gaining ground on the Euro and US Dollar. The IMF’s latest report revealed a -0.2% cut in estimated Canadian GDP for the next two years, with the economy expected to grow by 1.7% this year and 2.1% in 2017. While lower than previous forecasts, the figure is still significantly above Canada’s 1.2% GDP in 2015.
The bullish ‘Aussie’ negated any gains the ‘Loonie’ may have enjoyed thanks to the rise in Brent Crude oil prices, which hit a four-and-a-half-month high of US$43.28 per barrel.
The only data due for Canada today is the Teranet/National Bank House Price Index figures.
New Zealand Dollar
A strong rise in house sales helped the New Zealand Dollar gain momentum yesterday. The IMF may have forecast a slowdown in global growth, but with the safe-haven Euro and US Dollar the hardest hit by the news, risk-appetite remained heightened. The only losses for the ‘Kiwi’ were against its commodity peer, the ‘Aussie’, which benefitted from the same strengthening circumstances and much more domestic data.
Food price data is the only release due for New Zealand today, although Chinese and US publications are likely to have a significant effect on the ‘Kiwi’.
Data Released
April 13th 08.45 NZD Food Prices (MoM) (MAR)
April 13th 10.30 AUD Westpac Consumer Confidence (APR)
April 13th 19.00 EUR Euro-Zone Industrial Production w.d.a. (YoY) (FEB) 1.3%
April 13th 22.30 CAD Teranet/National Bank HP Index (MAR)
April 13th 22.30 USD Advance Retail Sales (MAR) 0.1%