Australian Dollar
Business capital investment fell for the eighth time in nine quarters at the end of 2016, data revealed yesterday. The Australian Dollar took a hit from the news, but was able to marginally return to positive territory later in the session. Business investment has failed to recover since the mining boom ended in 2012, although firms indicated they would spend more during the course of 2017 than initially forecast, which helped the ‘Aussie’ recover.
Reserve Bank of Australia (RBA) Governor Philip Lowe is due to testify to the Parliament Committee this morning.
Sterling
The outlook for the UK economy took another slight knock yesterday, but the AUD/GBP exchange rate was stuck at opening levels. The Pound was recovering from Wednesday’s GDP figures, which investors deemed a sign of bad things to come despite an upwards revision to quarter-on-quarter growth. Confederation of British Industry (CBI) survey data suggested increasing activity, with the retail sales index rising from -8 to 9, while distributed sales only weakened to 25 instead of to 24. But businesses also reported a gloomier outlook, building on the current prediction that the UK economy is set to slow this quarter.
The only UK data left for release before the weekend is the BBA loans for house purchase figures for January.
Euro
Eurozone data yesterday was positive, but threatened to reignite old tensions. Of particular concern to investors was the news that Germany’s budget surplus had climbed to a record €23.7 billion – the highest level since reunification. Germany has often been at odds with other Eurozone members – as well as the European Central Bank (ECB) – over its surplus; others claim it should be investing its windfall to help boost demand for imports from other Eurozone members, thereby aiding the economic recovery. This, combined with latent fears that Marine Le Pen could win the French Presidential elections, kept the Euro firmly on the downtrend.
US Dollar
The US Dollar slumped yesterday, despite confident comments from US Treasury Secretary Steven Mnuchin, who promised growth would accelerate to 3% following the administration’s planned tax reforms. However, investors were worried that the US was set to leave the World Trade Organisation (WTO), which had just announced a lowering of international import tariffs. The US administration is planning to raise import tariffs and lower those charged against exports. This contradiction in approaches could render the US and the WTO incompatible.
Canadian Dollar
The Canadian Dollar was on mixed form yesterday, despite strength in the crude oil markets. WTI advanced 1.7%, while Brent prices increased 1.8%. However, this was largely a correction on a previous slump and therefore only took prices back to around the highs seen the day before. Domestic data was absent from the data calendar, leaving nothing else to support the ‘Loonie’.
Canadian consumer price figures are set for release very early on Saturday morning.
New Zealand Dollar
There was no economic data on the calendar for New Zealand yesterday, yet the New Zealand Dollar racked up bullish gains against its peers. Weakness in the US Dollar enabled the ‘Kiwi’ to appreciate, buoyed by improved appetite for risk amongst investors.
Data Released
February 24th 09.30 AUD RBA’s Lowe Testimony to Parliament Committee
February 24th 20.30 GBP BBA Loans for House Purchase (JAN) 42600
February 25th 00.30 CAD Consumer Price Index (YoY) (JAN) 1.6%