- ‘Aussie’ Soft as RBA Governor Talks Down Monetary Policy – AUD/USD reaches 0.78
- AUD/GBP Holds Opening Levels – UK jobs and wage data disappoints
- AUD/EUR Bullish – Euro slides ahead of Mario Draghi speech
- New Zealand Dollar Slumps – Recovery on dairy prices short-lived
Australian Dollar
Cold US Dollar sentiment yesterday allowed the Australian Dollar to make small gains, although risk appetite was not particularly strong either. Ratings agency Moody’s kept the Australian Dollar soft after warning that government debt was likely to rise from 35% of GDP in June 2015 to 38% by June 2018. The agency blames commodity prices, which are limiting tax revenue and therefore the government’s ability to cut debt.
The ‘Aussie’ also remained soft after a speech by Reserve Bank of Australia (RBA) Governor Glenn Stevens in New York late on Tuesday night. Stevens talked down the power of central banks and appeared to be trying to limit expectations of further RBA action.
The NAB Business Confidence index is the most impactful data due out for Australia today.
Sterling
Disappointing UK jobs data allowed AUD/GBP to make small advances yesterday. The claimant count change increased by 6.7k, instead of dropping by -10k as predicted, while employment change only increased by 20k. Average weekly earnings for the three months to February showed a slowdown in growth, from 2.1% to 1.8%.
Today’s retail sales figures for March could weaken the Pound if they show the anticipated reduction in consumer spending. Public sector borrowing figures are likely to be the recipient of more scrutiny, however, as investors get closer to finding out whether George Osborne managed to achieve his borrowing reduction targets for the 2015/16 fiscal year.
Euro
The Euro was muted yesterday as traders awaited a speech by European Central Bank (ECB) President Mario Draghi. The latest data, the German producer price index, followed the recent trend of disappointing forecasts. Monthly prices saw no growth after a -0.5% decline previously, despite forecasts of a 0.2% increase. Year-on-year (YoY) prices fell at an accelerated pace of -3.1%, rather than the -2.9% forecast.
As a result the common currency remained weak as investors speculated Draghi would hint at the need for additional stimulus.
Tomorrow, the European Central Bank meets to decide monetary policy. No action is expected from this meeting, but traders will look to the subsequent press conference with Draghi for hints about the next meeting.
US Dollar
The US Dollar remained soft yesterday as sentiment continued to wane, with little economic data or news available to provide support. Warnings against a ‘Brexit’ by several previous US Treasury Secretaries and speculation that the Federal Reserve may wish to hold off on interest rate hikes until after the referendum helped to mute sentiment.
Jobless data tomorrow is likely to continue the US Dollar’s decline, as both initial and continuing jobless claims are forecast to rise slightly. The accompanying Philadelphia Fed index and the House Price Index are both expected to show worse figures than their previous printings.
Canadian Dollar
The Canadian Dollar was boosted yesterday despite falling oil prices and a pessimistic outlook from Bank of Canada (BOC) Governor Stephen Poloz. Speaking to lawmakers in Ottawa, Poloz warned that central bank policy was reaching its limit. Traders seemed to interpret this as a suggestion that the BOC would not look to loosen monetary policy again in the near future, boosting the ‘Loonie’.
There is no Canadian data due for release today.
New Zealand Dollar
A fall in commodity prices, with Brent Crude sliding back towards US$43 per barrel, conspired to weaken the New Zealand Dollar yesterday. The latest GlobalDairyTrade auction may have yielded a strong rise in dairy prices, but profit taking and carry trades saw the ‘Kiwi’ slump again. Domestic data and news was lacking.
Today, credit card spending figures for March could cause some movement.
April 21st 11.30 AUD NAB Business Confidence (1Q)
April 21st 13.00 NZD Credit Card Spending (YoY) (MAR)
April 21st 18.30 GBP Retail Sales (YoY) (MAR) 3.8%
April 21st 18.30 GBP Public Finances (PSNCR) (Pounds) (MAR)
April 21st 18.30 GBP Public Sector Net Borrowing (Pounds) (MAR) 5.4b
April 21st 21.45 EUR European Central Bank Rate Decision (APR 21) 0.00%
April 21st 22.30 USD Initial Jobless Claims (APR 16) 265k
April 21st 22.30 USD Continuing Claims (APR 9) 2178k