Australian Dollar
Weakness in the US Dollar saw the Australian Dollar climbing on Friday, helping the currency forget a lacklustre performance earlier in the morning. The AiG performance of service index for January fell from 57.7 to 54.5, while China’s Caixin PMI weakened more-than-forecast to 51. However, appetite for the ‘Greenback’ was severely dampened and so the ‘Aussie’ recorded strong gains as investors looked for more promising yields.
The Reserve Bank of Australia (RBA) makes its latest monetary policy decisions tomorrow.
Sterling
AUD/GBP exchange rates were able to trend bullishly at the end of the week after disappointing PMIs for the UK. The service sector index revealed a larger-than-expected slowdown from 56.2 to 54.5, dragging the composite below forecasts of 56 to 55.5 instead. A similar dip in January 2016 suggested some of this weakness could have been seasonal, but nonetheless traders reacted dovishly to the reports.
The UK’s balance of trade report will be released on Friday.
Euro
The Euro was on mixed form on Friday, helped by the US Dollar and data that was positive enough to support the common currency but not strong enough to trigger a sizeable rally. Finalised Eurozone services and composite PMIs largely improved above forecast, with the Eurozone services index holding at December’s five-and-a-half-year high of 54.4. Retail sales disappointed on the month somewhat, after falling -0.3% instead of growing by a commensurate amount.
The Eurozone Sentix investor confidence index is due for release today.
US Dollar
Friday’s mostly positive labour market data didn’t manage to strengthen the US Dollar. The non-farm payrolls report had been expected to show that 180,000 jobs were added in January, but instead printed at an impressive 227,000. The unemployment rate rose by 0.1% to 4.8%, but this was due to an unexpected rise in the participation rate, meaning more people were actively looking for work. However, the ‘Greenback’ still weakened, with investors focussing on the disappointing wage growth data. At 0.1% on the month and 2.5% on the year, January’s average hourly earnings increased by -0.2% less than forecast in both cases.
The University of Michigan confidence survey results are released very early on Saturday morning.
Canadian Dollar
The Canadian Dollar was on mixed form on Friday. US Dollar weakness was supporting crude oil prices, helping to keep the ‘Loonie’ in demand. However, indications that US President Donald Trump wants to begin renegotiation of the North American Free Trade Agreement (NAFTA) as early as May unsettled investors. A huge portion of Canada’s total exports go to the US, so being forced to concede certain favourite terms in order to keep some sort of agreement in place would hurt the Canadian economy, assuming the partnership can be saved at all.
Canadian labour market figures are set for release very early on Saturday.
New Zealand Dollar
Rising global risk-appetite boosted the New Zealand Dollar on Friday. The only data released for New Zealand was the ANZ commodity price index in January, which declined -0.1%. Investors didn’t pay it much attention, given the weakened state of the ‘Greenback’ and the potential for higher ‘Kiwi’ yields.
Thursday will see the Reserve Bank of New Zealand (RBNZ) announcing its latest monetary policy decisions.
Data Released
February 6th 20.30 EUR Eurozone Sentix Investor Confidence (FEB)
February 7th 14.30 AUD Reserve Bank of Australia Rate Decision (FEB 07) 1.5%
February 9th 07.00 NZD Reserve Bank of New Zealand Rate Decision (FEB 09)
February 10th 20.30 GBP Balance of Trade (Pounds) (DEC) -£2.7b
February 11th 00.30 CAD Net Change in Employment (JAN) 23.3k
February 11th 02.00 USD U. of Michigan Confidence (FEB P) 97.8