Australian Dollar
Investors weren’t in the mood for risk yesterday, so the Australian Dollar weakened. ‘Aussie’ demand took a hit over the weekend after the International Monetary Fund (IMF) warned that Australia could get caught in a low inflation trap if it did not halve interest rates to 0.75% within the next six months. The report goes against the outlook for the Reserve Bank of Australia (RBA), which has softened its impact, but the suggestion has nonetheless shaken investors. The only data released was low impact credit card figures for December, which showed a small increase in both balances and purchases.
Chinese inflation data released today is likely to overshadow the Australian NAB business confidence index for January as the biggest influencer of ‘Aussie’ movement.
Sterling
AUD/GBP tumbled yesterday, despite a lack of fresh UK data. Friday’s releases were continuing to stimulate demand for the Pound, however. The prospect of an upward revision to last year’s fourth-quarter GDP improved the economic outlook for the UK, so Sterling rose as investors priced-in a better-than-expected performance.
UK inflation data is set for release today.
Euro
New European Commission economic forecasts ended a Euro slump during yesterday’s session, allowing the common currency to post strong advances against many of its peers. Greece was firmly in focus again, as even a member of the country’s central bank aired an opinion on the need for the country and its creditors to make concessions and get the bailout back on track. However, the latest EC forecasts suggested concerns over Greece’s economic performance could be unfounded. The report predicts the Greek economy will grow 2.7% this year and 3.1% in 2018.
A stream of Eurozone 2016 Q4 GDP figures are set for release today.
US Dollar
Markets were back to getting excited by the prospect of fiscal stimulus measures from President Donald Trump yesterday. The US Dollar made strong advances as investors eyed the approaching State of the Union address in which it is expected Trump will outline his tax reforms to Congress. Analysts warned that investors could be set for disappointment if Congress seems resistant to Trump’s promises of greater spending measures, but strong demand pushed the ‘Greenback’ higher nonetheless.
Federal Reserve Chair Janet Yellen appears before the Senate Banking Panel early tomorrow morning, which could take investor focus away from Trump’s stimulus plans for a while.
Canadian Dollar
The Canadian Dollar was mixed yesterday, gaining versus its commodity peers but weakening against the safer US Dollar and Pound. There was a lack of domestic data to provide support, while the oil markets were weakening on USD strength. WTI crude had declined -1.4%, while Brent fell -1.6%. Investors were waiting for fresh news as Prime Minister Justin Trudeau met with his US counterpart Donald Trump to discuss trade over a working lunch. The future of Canadian trade hangs in the balance, so the outcome of the meeting could set the tone for the renegotiation of the North American Free Trade Agreement (NAFTA).
New Zealand Dollar
The New Zealand Dollar declined yesterday, with Trump hopes keeping investors on the hunt for safer assets. The day’s data provided little support, despite being positive. Figures for January showed that card spending on retail grew 2.7% month-on-month in January. Expectations had been for 0.7% growth. Overall card spending increased 2.5%.
REINZ house sales data is set for release this morning, but the ‘Kiwi’s biggest influencer could be the Chinese consumer price index released this afternoon.
Data Released
February 14th 07.30 NZD REINZ House Sales (YoY) (JAN)
February 14th 11.30 AUD NAB Business Confidence (JAN) 7
February 14th 12.30 CNY Consumer Price Index (YoY) (JAN) 2.4%
February 14th 20.30 GBP Consumer Price Index (YoY) (JAN) 1.9%
February 14th 21.00 EUR Eurozone Gross Domestic Product s.a. (YoY) (4Q P) 1.8%
February 15th 02.00 USD Fed’s Yellen Appears Before Senate Banking Panel