Headlines
- ‘Aussie’ Advances on Overseas Weakness – AUD capitalises on softening majors
- AUD/GBP Slumps on Escalating ‘Brexit’ Argument – Obama urges UK to support EU
- AUD/EUR Advances – Disappointing Eurozone PMIs suggest more ECB stimulus is needed
- NZD Slumps – ‘Kiwi’ weakens across the board
Australian Dollar
Friday’s performance from the Australian Dollar was driven more by overseas weakness than by domestic strength. A lack of home data meant upwards pressure on the ‘Aussie’ was fairly weak, although the Chinese MNI April Business Indicator rising from 49.9 to 50.5 helped to improve market sentiment. The Australian Dollar’s biggest gains were against the New Zealand Dollar and the Euro, both of which were suffering from major dragging factors.
There is no Australian data due until Tuesday, when Consumer Price data for the first quarter of the year will be released.
Sterling
Despite a lack of domestic data to support the Pound, the Australian Dollar slumped against the British asset on Friday. Downward pressure on the ‘Aussie’ came from the ‘Brexit’ debate, which heated up following the intervention of Barack Obama. The US President urged the UK to remain a part of the European Union, causing the Pound to make bullish advances against most of the majors. The ‘Leave’ campaign got into hot water after Boris Johnson alluded to suggestions that Obama’s ‘part-Kenyan’ ancestry explained his attitude towards the UK.
UK data is sparse until Wednesday, when first quarter GDP figures are released.
Euro
Disappointing Markit PMIs for the Eurozone continued to highlight the current weak pace of growth in the currency bloc on Friday, raising rate cut bets. The Eurozone manufacturing, services and composite indexes all showed a surprise slowdown in growth, having been forecast to rise moderately, while Germany’s services and composite indexes also disappointed predictions. Investors once again set about speculating over the need for looser monetary policy from the European Central Bank (ECB).
The Eurozone releases the only important economic data on today’s calendar; the IFO Business Climate, Current Assessment and Expectations indexes.
US Dollar
The US Dollar put on a mixed performance on Friday, with sentiment remaining muted thanks to uncertainty over the future of Federal Reserve monetary policy. There was little domestic data to provide any particular movement, although the Leading Indicators figure only managed to climb to 0.2%, rather than increase from -0.1% to 0.4% as predicted. The US Dollar made some minor gains, although there were significant losses verses the strengthening Pound Sterling and Canadian Dollar.
The US data docket opens this week with a slew of releases on Tuesday, including influential Durable Goods Orders figures, as well as home sales/pricing data and the Markit US Services and Composite PMIs.
Canadian Dollar
The Canadian Dollar was trending bullishly on Friday after a surprise performance from the Consumer Price Index report for March. Year-on-year prices had been expected to dip from 1.4% to 1.2%, but instead printed at 1.3%. Core consumer prices, however, performed even better. On the month, inflation accelerated to 0.7% rather than dropping from 0.5% to 0.4%, while on the year prices increased from 1.9% to 2.1% instead of slowing to 1.7%.
Bank of Canada (BOC) Governor Stephen Poloz is speaking in New York on Wednesday, so there is the potential for significant ‘Loonie’ movement mid-week as a result of his words.
New Zealand Dollar
After peaking mid-week, Friday saw the ‘Kiwi’ continue its slide, ending the week below opening levels against several of the majors. With the next Reserve Bank of New Zealand (RBNZ) interest rate decision approaching, appetite for the New Zealand Dollar was muted, with nearly half of traders believing the meeting would yield another cut to interest rates. Investor profit-taking saw shares in mining companies drop, which caused the commodity-correlated New Zealand Dollar to slump further.
The week is empty of New Zealand data until Wednesday, when the latest trade figures will be released.
April 25th 18.00 EUR German IFO – Business Climate (APR) 107.1
April 25th 18.00 EUR German IFO – Current Assessment (APR) 113.8
April 25th 18.00 EUR German IFO – Expectations (APR) 100.9
April 26th 22.30 USD Durable Goods Orders (MAR P)
April 26th 22.40 CAD Bank of Canada’s Poloz Speaks in New York
April 27th 08.45 NZD Trade Balance (New Zealand dollars) (MAR)
April 27th 11.30 AUD Consumer Prices Index (YoY) (1Q)
April 27th 18.30 GBP Gross Domestic Product (YoY) (1Q A)