Australian Dollar
The Australian Dollar was on mixed form yesterday, but losses were largely the result of profit-taking following the Reserve Bank of Australia’s latest policy announcements. The board held rates at 1.5%, as had been expected, while signalling that the freeze could remain in place for some time. The fact the RBA left growth forecasts at around 3% suggested that it did not see lasting damage from the worse-than-forecast contraction of -0.5% seen in Q3 last year. This further supported the ‘Aussie’, up until the point traders decided to lock in profits.
Sterling
AUD/GBP made a strong advance yesterday, despite hawkish comments from a Bank of England (BoE) policymaker. Kristin Forbes claimed that, if economic data continued to show above-forecast performance, the Monetary Policy Committee (MPC) may be required to hike interest rates. Additionally, it was confirmed to Parliament that MPs would get a say on the final Brexit deal before the European Parliament voted on it. But weak retail sales and house price data, coupled with the news Labour’s first attempts to amend the Article 50 bill had been defeated, kept Sterling on the downtrend.
BoE Deputy Governor Jon Cunliffe is set to give a speech at midnight tonight.
Euro
The Euro was largely weak yesterday thanks to fresh concerns over the future of the Greek bailout. The International Monetary Fund (IMF) released a statement in which it admitted that not all of its directors agreed that Greek budget surplus targets set by Eurogroup were unobtainable. The IMF has long-argued with Eurogroup over the level of budget surplus that the bailout conditions should mandate. Eurozone creditors believe 3.5% is achievable and some IMF directors, it was revealed yesterday, agree with this, despite the Fund itself pushing for debt relief and a lower surplus target of 1.5% of GDP.
US Dollar
The US Dollar was bullish yesterday after Federal Reserve official Patrick Harker claimed the Fed should consider the March meeting for its next interest rate hike. The Philadelphia Fed President stated that he was still supportive of raising borrowing costs three times over the course of 2017. Data has also supported the US Dollar, with a greater-than-expected narrowing of the December trade deficit to -US$44.3 billion helping allay fears that an overvalued ‘Greenback’ is weighing on US exports.
US mortgage application figures are released late tonight.
Canadian Dollar
US Dollar bullishness was pressuring crude oil prices lower yesterday, weakening the Canadian Dollar against the majority of its peers. Brent crude fell -1.4%, while WTI crude weakened -1.6%. While December’s international merchandise trade balance recorded another surplus, clocking in at CA$0.9 billion, the ‘Loonie’ remained soft. Investors may find some cause for cheer in the data, however; considering Donald Trump’s plans to renegotiate free-trade deals, investors will likely be relieved to see that Canada’s trade activities with non-US countries increased much faster than with its North American neighbour.
Canadian housing starts figures are released just after the turn of midnight tomorrow.
New Zealand Dollar
Another rise in dairy prices at the latest auction helped support the New Zealand Dollar yesterday. Prices rose 1.3% – an acceleration on the previous event’s 0.6% gains, although still sluggish compared to the 11.4% leap seen at the beginning of November 2016. The ‘Kiwi’ was somewhat held back, however, thanks to the strength of the US Dollar.
The ANZ truckometer heavy is scheduled for release this morning, with the Reserve Bank of New Zealand (RBNZ) interest rate decision set for announcement early tomorrow morning.
Data Released
February 8th 08.00 NZD ANZ Truckometer Heavy (MoM) (JAN)
February 8th 23.00 USD MBA Mortgage Applications (FEB 03) -3.2%
February 9th 00.00 GBP BOE Deputy Governor Jon Cunliffe speaks in Birmingham
February 9th 00.15 CAD Housing Starts (JAN) 200k
February 9th 07.00 NZD Reserve Bank of New Zealand Rate Decision (FEB 09) 1.75%