Australian Dollar
Yesterday’s employment data sparked a bullish run for the Australian Dollar after an unexpected drop in unemployment. The rate of joblessness dropped -0.1% to 5.7% in March instead of rising to 5.9% as predicted. After a -0.7k drop in employment change in February, yesterday’s result of 26k new positions significantly bettered the 17k forecast.
The ‘Aussie’ made significant gains on the back of the data, ignoring warnings from several commentators that the figures were mainly due to a rise in part time roles, with full time positions actually falling nearly -9k.
The only data for Australia today is the RBA Financial Stability Review, however Chinese GDP figures released earlier this morning could have a serious impact on market sentiment for the rest of the day.
Sterling
Another rate freeze and a fresh ‘Brexit’ warning from the Bank of England (BoE) saw the AUD/GBP exchange rate advance yesterday. The Monetary Policy Committee (MPC) noted that businesses may be postponing decisions regarding investment and property deals until after the referendum, softening economic growth in the process. A ‘Leave’ vote could also result in ‘an extended period of uncertainty about the economic outlook’, according to the MPC minutes.
The Pound did not strengthen following Labour party leader Jeremy Corbyn’s declaration of support for the European Union. This is perhaps because investors are waiting for the next round of polls before deciding what impact his voice will have on the campaign.
Today’s only data for the UK is construction output figures, which are expected to show an annual rise.
Euro
Sentiment towards the Euro soured yesterday after Eurozone inflation figures painted a bleak picture. The final non-core result actually printed better than expected, coming in at 0.0% rather than -0.1%. However, this result was little cause for investors to celebrate, especially as many were hoping the impact of the European Central Bank’s (ECB) latest aggressive stimulus measures would have been felt by now.
The ECB Survey of Professional Forecasters is due out today and will reveal the outlook of economists with regards to the Eurozone.
US Dollar
The US Dollar saw mostly weak sentiment yesterday after US Consumer Price Index figures undershot estimates. Core inflation unexpectedly slowed in March from 2.3% to 2.2% year-on-year (YoY), while the core index dipped from 1% to 0.9% against forecasts of a rise to 1.1%.
This was particularly disheartening for investors because the main case in favour of hiking rates, despite global weakness, was the inherent strength of the US economy. Weakening inflation could signal a slowing economy, undermining the argument for tighter monetary policy.
The highly influential University of Michigan Confidence index for April is due out today. An uptick in sentiment is expected for the preliminary figures, although after today’s weak inflation data, there is a chance the actual result could fall short.
Canadian Dollar
AUD/CAD charged ahead thanks to ‘Aussie’ strength despite the Canadian Dollar being in relatively strong position itself, as the recent optimism from the Bank of Canada (BOC) continued to cheer investors. A rise in the domestic New Housing Price Index to 1.8% on the year and 0.2% on the month continued warming sentiment.
Brent Crude oil continued to hold above the US$44 per barrel mark, helping to improve the ‘Loonie’ outlook.
Existing Home Sales figures due today could help to further strengthen appetite for the Canadian Dollar.
New Zealand Dollar
A surprise easing of monetary policy by Singapore’s central bank sparked fears of a currency war, sending the New Zealand Dollar slumping more than -1.3% against the Australian Dollar. Investors feared that other Asia-Pacific countries may have to follow suit in other to keep their currencies competitive, raising concerns that the Reserve Bank of New Zealand (RBNZ) could cut rates soon.
In other central bank news, the RBNZ has announced that the result of future policy meetings will be released to the media and the public at the same time. This follows the leak of the surprise decision to cut rates in March from a media ‘lockup’, where the decision is revealed to journalists who have handed over all communication devices.
There is no data for New Zealand due today, but high impact Chinese and US data could move the ‘Kiwi’.
Data Released
April 15th EUR ECB Survey of Professional Forecasters
April 15th 03.00 CNY GDP YTD (YoY) (1Q) 6.7%
April 15th 03.00 CNY GDP s.a. (QoQ) (1Q) 1.5%
April 15th 03.00 CNY GDP (YoY) (1Q) 6.7%
April 15th 14.00 CAD Existing Home Sales (MoM) (MAR)
April 15th 15.00 USD U. of Michigan Confidence (APR P) 91.8