Australian Dollar
The Australian Dollar was the weakest of the three key commodity Dollars yesterday, despite a run of positive domestic data. Consumer confidence edged higher in the week ending January 29th, climbing over one point to 118.1. NAB business conditions and confidence scores both rose, the former more than doubling and private sector credit data showed an above-forecast rise during December. However, the strong Canadian data released just after midnight today made the ‘Loonie’ a more appealing investment and so the ‘Aussie’ struggled.
Manufacturing data is likely to weigh on the ‘Aussie’ today. However, despite the presence of the domestic AiG performance of manufacturing report, it is likely to be China’s latest industry PMI that causes the most AUD movement.
Sterling
The Australian Dollar Pound Sterling exchange rate was able to creep above opening levels yesterday, as the Pound was in a similarly miserable condition. Consumer confidence data may have shown a surprise rise to -5, but a read of the sub-indices took the shine off the headline movement. Consumer spending is vital for economic growth in the UK, but the latest sentiment survey from GfK showed that household confidence in the outlook for the economy was significantly worse than a year ago. Fewer households agreed that now was a good time to make a big purchase, further weakening the outlook for spending going forwards.
The latest Markit manufacturing PMI is set for release later today.
Euro
The Euro was on mixed form yesterday, although the common currency managed to rack up strong gains versus many of its peers. The day’s data was largely positive, with German unemployment unexpectedly falling to 5.9%, Eurozone unemployment dropping to 9.6% and Q4 Eurozone GDP figures clocking in ten basis points above forecast both on the month and the year. However, Donald Trump’s top trade advisor unsettled the markets after stating that Germany was a barrier to US-EU trade, claiming the country was a currency manipulator who exploited a ‘grossly undervalued’ Euro. This boosted the Euro against the US Dollar, but complicated the outlook of future trade relations between the US and the Eurozone.
The Euro could be supported today by a slight rise in the Markit manufacturing PMI, according to forecasts.
US Dollar
Trade advisor Peter Navarro’s attacks on Germany caused the US Dollar to tank yesterday. It added a fresh controversy to the administration that is still facing a global backlash from its ban on citizens from seven predominantly-Muslim countries signed over the weekend. Further adding to ‘Greenback’ woes was the fact that the consumer confidence index had edged lower from 113.3 to 111.8.
Early tomorrow morning we will see the release of the latest ISM manufacturing PMI, with a slight rise predicted.
Canadian Dollar
A combination of strong domestic data and a weak US Dollar boosted the Canadian Dollar yesterday. November GDP figures clocked in at 1.6% year-on-year, against forecasts of a slip from 1.5% to 1.4%. On the month, economic expansion returned to growth territory, bettering estimates of 0.3% by ten basis points. Meanwhile, the weakness in the US Dollar caused a strong rally for crude oil prices, with Brent up 0.9% and crude up 1.1%.
The Canadian Dollar could see some movement today in the wake of a speech by Bank of Canada (BOC) Governor Stephen Poloz.
New Zealand Dollar
The New Zealand Dollar was largely on strong form yesterday. Net migration edged down from its record high, relieving investors who are worried that the influx of people could pressure New Zealand’s infrastructure and budget. Meanwhile, the M3 money supply growth accelerated significantly, climbing half a percent to 6.4%. This means that the amount of New Zealand Dollars and assets denominated in NZD is increasing at a fast pace. The more currency in circulation, the weaker its purchasing power becomes, lifting consumer prices and therefore improving the odds that the Reserve Bank of New Zealand (RBNZ) will hike interest rates.
The fourth-quarter unemployment rate could boost the New Zealand Dollar today, given that a fall to 4.8% is forecast. The Chinese manufacturing PMI could curb gains, however.
Data Released
February 1st 08:45 NZD Unemployment Rate (4Q) 4.8%
February 1st 09:20 CAD Bank of Canada’s Poloz speaks at University of Alberta
February 1st 09:30 AUD AiG Performance of Manufacturing Index (JAN)
February 1st 12:00 CNY Manufacturing PMI (JAN) 51.2
February 1st 20:00 EUR Markit Eurozone Manufacturing PMI (JAN F) 55.1
February 1st 20:30 GBP Markit UK PMI Manufacturing SA (JAN) 55.9
February 2nd 03.00 USD ISM Manufacturing PMI (JAN) 55