Australian Dollar
The Australian Dollar was on mixed form yesterday. The AiG performance of manufacturing index for January dropped from 55.4 to 51.2, although other data was positive. The RBA commodity index climbed from 116.1 to 120.9. Additionally, the Chinese manufacturing PMI for January only weakened by ten basis points – half what was forecast – to 51.3. Weighing on the ‘Aussie’ was a warning from Prime Minister Malcolm Turnbull that harsher times and fewer prospects were on the way.
Australian trade balance figures for December are set for release today; the recent strong export price data means that a surplus is practically guaranteed, according to economists.
Sterling
Data failed to do much for the Pound yesterday, but the AUD/GBP exchange rate still slumped. A leaked EU memo showed that officials believed denying UK financial service firms access to the single market would damage the economies of remaining member states. The report concluded that it was within the EU’s best interests to negotiate some sort of access, lessening the risk of a significant impact to the UK’s dominant banking sector from Brexit. Investors, cheered by this news, swiftly bought the Pound.
The Bank of England’s (BoE) ‘Super Thursday’ sees the release of the next inflation report coincide with announcements of any changes in monetary policy. Governor Mark Carney will hold a press conference shortly after.
Euro
Some solid manufacturing performances from Eurozone member states didn’t help the Euro advance yesterday. Austria and France saw manufacturing growth at around 70-month highs, Germany’s was at a 36-month high and Spain’s at a twenty-month high. However, the impasse between Greece and its Eurogroup creditors showed no signs of abating, despite a rapidly-approaching deadline to conclude a second bailout review. With major debt repayments due in July, the country is running out of time to secure the funds it needs to avoid triggering another Eurozone crisis.
Mario Draghi is scheduled to give a speech later tonight. He may repeat his earlier trick of weakening the Euro by dismissing recent strong inflation results.
US Dollar
The US Dollar was mostly racking up strong gains in overnight trading. The latest ADP employment change figure for December revealed that job creation at the end of 2016 vastly outpaced forecasts. 168,000 new jobs had been expected, but this was smashed by the actual result of 246,000. There is no proven correlation between the ADP figures and the hugely-influential non-farm payrolls data due very early on Saturday, but traders often believe the former is indicative of the performance of the latter regardless. Additionally, factory growth in the US hit a 22-month high, according to the Markit PMI. The more influential ISM index climbed to 56; one point above forecasts.
US jobless claims data will be released very early tomorrow morning.
Canadian Dollar
Bank of Canada (BOC) Governor Stephen Poloz weakened investor sentiment again yesterday after commenting that traders should expect policy divergence between the BOC and the US Federal Reserve. He warned that Canada’s economy was lagging behind the US and therefore the BOC would not be tempted to follow the Fed into an early hiking cycle. The Canadian Dollar largely weakened yesterday, even though the Markit manufacturing PMI for January strengthened from 51.8 to 53.5.
New Zealand Dollar
The New Zealand Dollar slumped yesterday. While a surprise rise in unemployment during the fourth quarter of 2016 from 4.9% to 5.2% could be blamed on an unexpected increase in the participation rate to 70.5%, not all negative developments could be so easily dismissed. Wage data disappointed, with average hourly earnings declining -0.3% on the quarter instead of accelerating from 0.3% to 0.6% as forecast. This dampened the inflation outlook and saw the ‘Kiwi’ sliding.
The only New Zealand data set for release today is the ANZ job advertisements report.
Data Released
February 2nd 08.00 NZD NZD ANZ Job Advertisements (MoM) (JAN)
February 2nd 11.30 AUD Trade Balance (Australian dollar) (DEC) AU$2.2b
February 2nd 23.00 GBP Bank of England Inflation Report
February 2nd 23.15 ECB ECB’s Mario Draghi Speaks in Ljubljana
February 3rd 00.30 USD Continuing Claims (JAN 21) 2065k