Australian Dollar
Recent comments from Reserve Bank of Australia (RBA) Governor Philip Lowe suggested policymakers were not concerned about the Australian Dollar being overvalued. This lowered the odds of policy adjustments by the RBA to try and weaken the ‘Aussie’ and so investors quickly bought into AUD, driving exchange rates higher. The Governor also continued to hold a strong outlook for the Australian economy, predicting that inflation would increase gradually between now and 2019.
The Reserve Bank of Australia (RBA) will release its Statement on Monetary Policy this morning.
Sterling
AUD/GBP was stuck around opening levels yesterday. Traders were worried about Donald Trump’s priorities, but a simultaneously weak Euro forced investors to buy into the Pound in order to find a relatively safe-haven to wait out the latest political uncertainties. The latest house price balance index from the Royal Institute of Chartered Surveyors (RICS) helped firm the outlook for Sterling after printing at 25% instead of weakening from 23% to 22% as forecast.
UK trade figures are part of the busy data docket today, which also includes industrial, manufacturing and construction output reports.
Euro
Developments in the Greek debt crisis continued to undermine the Euro yesterday. Officials from Eurogroup met to discuss the bailout, with markets very much of the understanding that failure to agree some kind of compromise would mean the official Eurogroup meeting on the 20th this month would be unable to strike a deal. However, the battle lines were drawn and remained rigid. Greek farmers continued to protest the current austerity measures planned, pressuring the government not to cave in to demands to legislate further spending cuts. Meanwhile, German Finance Minister Wolfgang Schauble claimed the only way Greece could get debt relief was if it quit the Eurozone.
There is no Eurozone data on the calendar today, but ECB officials Mersch and Weidmann will both be making speeches later.
US Dollar
The US Dollar softened yesterday as traders began to run out of patience with US President Donald Trump. Investors have overlooked many controversies and potentially damaging developments during the first few days of the Republican’s fledgling Presidency. However, with there still being no sign of the fiscal spending measures Trump promised on the campaign trail, the outlook for US inflation was starting to weaken. USD received some support, however, with the latest initial jobless claims figure clocking in -15,000 below forecast at 234,000.
The preliminary University of Michigan consumer confidence index for February is set for release very early tomorrow morning.
Canadian Dollar
Investors concerned about the future of trade relations between Canada and the US received some hope yesterday. The Canadian Dollar advanced after bold rhetoric from Canada’s Foreign Affairs Minister Chrystia Freeland that the country would not kowtow to President Trump’s demands. Recalling her conversation with her US counterpart Rex Tillerson, Freeland claimed Canada would retaliate to any tariffs levied against exports to the US. She also claimed Tillerson showed a ‘very deep understanding of our economic relationship’, which investors interpreted to mean he understood how important free trade was between the two nations.
Headline labour market figures are set for release very early tomorrow morning. Forecasts are for a slight decline in the number of people in work, which may soften the ‘Loonie’.
New Zealand Dollar
The New Zealand Dollar slumped yesterday after dovish comments from the Reserve Bank of New Zealand (RBNZ). Policymakers held interest rates at their current historic low of 1.75%, while Governor Graeme Wheeler suggested they would remain at this rate for a ‘considerable’ period. Investors, some of whom had been expecting a more hawkish statement following the rise of inflation to within the RBNZ’s target range at the end of 2016, quickly sold the ‘Kiwi’.
There is no New Zealand data set for release today.
Data Released
February 10th 11.30 AUD RBA Statement on Monetary Policy
February 10th 20.30 GBP Total Trade Balance (Pounds) (DEC) -£2.7b
February 10th 15.29 EUR ECB’s Mersch Speaks in Hamburg
February 11th 00.30 CAD Net Change in Employment (JAN) -5k
February 11th 02.00 USD U. of Michigan Confidence (FEB P) 97.9