Australian Dollar
It was a sparse data day across the board yesterday, but the Australian Dollar was able to make modest gains on the back of a strong performance from the commodity markets. Iron ore bounced after two days of decline, registering a 3.3% recovery. Sentiment towards Australia’s key export was boosted further after Rio Tinto, one of the world’s largest mining firms, announced a surprise AU$500 million share buyback. This indicated that the firm was continuing to capitalise on strong iron ore prices, winding down its debt pile in the process.
Reserve Bank of Australia (RBA) Governor Philip Lowe will be giving a speech later today.
Sterling
Despite the boost from rising iron ore prices, the AUD/GBP exchange rate was volatile yesterday. On the one hand, the Pound was weakened by the revelation that MPs would not have the power to send Theresa May back to the negotiating table once a Brexit deal had been forged. The vote Parliament would receive would simply be to decide whether to accept the deal or sever all ties with the EU without any agreement in place. However, Sterling was supported by a Bank of England (BoE) survey of 700 UK companies that suggested investment was recovering after taking a strong hit in the aftermath of the referendum.
The RICS house price balance will be released later today.
Euro
The focus was firmly on Greece again yesterday. The row between the International Monetary Fund (IMF) and Eurogroup continued. According to the Fund’s latest report, Greece’s debt burden could become ‘explosive’ by 2030. Additionally, the report stated that the slowdown in Greece’s economic activity as a result of the debt crisis has been comparable to that of the US during the Great Depression, albeit more prolonged. However, Eurogroup President Jeroen Dijsselbloem slapped down the idea of debt relief, commenting that the IMF’s claim Greece desperately needs such measures was ‘surprising because Greece is already doing better than that report describes’.
December’s German trade balance figures are set for release today.
US Dollar
With little in the way of US developments yesterday, traders turned to selling the US Dollar. Data was in thin supply, with the US consumer credit figure and the MBA mortgage applications figures bookending an otherwise empty economic calendar. With nothing in particular on the cards until Friday, investors turned away from the ‘Buck’ to currencies with more upside potential, taking advantage of the multi-day high the ‘Greenback’ reached recently versus some of its peers.
US data very early tomorrow is expected to show the rate of initial jobless claims in the US edged higher in the week ending February 4th to 250,000.
Canadian Dollar
Data detailing US stockpiles of crude oil weakened the Canadian Dollar yesterday. Inventories had been predicted to increase by 2.5 million barrels, but instead swelled by 13.8 million. This lowered the outlook on demand for crude oil in the coming weeks, weighing on the ‘Loonie’.
Canada’s new housing price index for December is set for release just after midnight tomorrow.
New Zealand Dollar
The New Zealand Dollar was largely making mild gains yesterday, although it weakend somewhat against the Australian Dollar. The ANZ truckometer showed an accelerated decline in haulage activity, with traffic falling -0.8% in January after December’s -0.1% downtick. But ‘Kiwi’ softness was largely due to this morning’s Reserve Bank of New Zealand (RBNZ) policy announcements being just around the corner. Investors were hoping for signs that the RBNZ is finished with its easing cycle.
The RBNZ policy decisions are expected shortly.
Data Released
February 9th 07.00 NZD Reserve Bank of New Zealand Rate Decision (FEB 09) 1.75%
February 9th 11.01 GBP RICS House Price Balance (JAN) 22%
February 9th 18.00 EUR German Trade Balance (euros) (DEC) 19.5b
February 9th 20.00 AUD RBA Governor Lowe Speech in Sydney
February 10th 00.30 CAD New Housing Price Index (YoY) (DEC)
February 10th 00.30 USD Initial Jobless Claims (FEB 04) 250k