Australian Dollar
The Australian Dollar had a poor end to the week thanks to a lack of domestic data and waning risk appetite. The US Dollar was strengthening and this further accelerated ‘Aussie’ losses.
Tuesday will see the release of the latest Reserve Bank of Australia (RBA) meeting minutes, which will give more information about the board’s outlook on the economy and monetary policy.
Sterling
Despite weakening virtually across the board, the AUD/GBP exchange rate was able to post minor gains on Friday. Sterling weakened on the back of poor retail sales figures for January, which showed a significantly worse performance than markets had been expecting. Sales declined -0.3% on the month and rose 1.5% on the year; forecasts were for growth of 0.9% and 3.4% respectively.
The second round of UK GDP estimates for the final quarter of 2016 are set for release on Wednesday.
Euro
A surge in construction output for the Eurozone helped the Euro make some gains on Friday, but the common currency was on undoubtedly mixed form overall. Working-day-adjusted construction jumped 3.2% – a five-month high. Additionally, November’s output was revised higher to 0.6% – original estimates had suggested the sector stagnated in the penultimate month of the year.
The Eurozone composite report will be one of a slew of PMIs released on Wednesday.
US Dollar
The US Dollar was making slight gains on Friday. Like many other nations, the US released very little economic data and what releases there were had no discernible impact upon the ‘Greenback’. High bets of a rate hike in March and of President Donald Trump announcing stimulus measures buoyed demand for USD, but markets were cautious of overdoing their optimism.
Markets will be eagerly awaiting Thursday’s meeting minutes from the Federal Reserve’s monetary policy meeting earlier this month.
Canadian Dollar
The Canadian Dollar managed to escape the negative sentiment surrounding its commodity peers in order to post strong gains on Friday. The oil markets were weakening on the back of US Dollar strength, but this wasn’t enough to drag the ‘Loonie’ down. Prime Minister Justin Trudeau expressed his confidence that spring would see the Canadian parliament ratify the Comprehensive Economic and Trade Agreement (CETA) with the EU, boosting the outlook for overseas trade.
The biggest Canadian data of the week – consumer price figures for January – won’t be released until very early on Saturday morning.
New Zealand Dollar
Like the Australian Dollar, the New Zealand Dollar weakened against most of its major peers on Friday – with the notable exception of small gains versus Pound Sterling. As well as weak risk appetite, the ‘Kiwi’ was also hampered by disappointing domestic data. The Business New Zealand performance of manufacturing index for January fell from 54.2 to 51.6, while retail sales excluding inflation remained at 0.8% in 2016 Q4 instead of accelerating on the quarter to 1%.
The biggest driver of the New Zealand Dollar this week is likely to be the results from today’s Global Dairy Trade auction. Should milk prices rise, the New Zealand Dollar could see strong appreciation.
Data Released
February 20th NZD Dairy Auction Avg. Winning Price MT (FEB 21)
February 21st 11.30 AUD RBA Feb. Meeting Minutes
February 21st 20.00 EUR Markit Eurozone Composite PMI (FEB P)
February 22nd 20.30 GBP Gross Domestic Product (YoY) (4Q P)
February 23rd 06.00 USD FOMC Meeting Minutes (FEB 01)
February 25th 00.30 CAD Consumer Price Index (YoY) (JAN)