Australian Dollar
Data showing a surge in company profits during the fourth quarter of 2016 boosted the Australian Dollar yesterday, although the ‘Aussie’ weakened versus a recovering Euro. Fears that the economy is heading towards its first recession in 25 years were softened by the news operating profits leapt 20.1% higher on the quarter; an already-sizeable jump of 8% had been forecast.
Australian private sector credit figures will give an indication of whether or not businesses are planning investment and expansion in the near-term.
Sterling
AUD/GBP exchange rates made a strong advance yesterday as the Pound tumbled on fresh fears regarding the impending Brexit. Two rumours unsettled traders; that the government was braced for Scotland to demand a second independence referendum, and that Theresa May would announce a March cut-off date for EU national’s eligibility to become permanent UK residents. This could contravene EU treaties on freedom of movement, which the UK is meant to be bound by until it official exits the project.
Considering how important household spending is for UK economic growth, today’s consumer confidence figures could cause significant volatility for the AUD/GBP exchange rate.
Euro
New election polls indicated that Emmanuel Macron would easily see off Marine Le Pen in the second round of French elections at the beginning of May. Dwindling prospects of a victory for the far-right candidate boosted investor confidence and so the Euro posted solid rises across the board. Improving confidence figures also helped support demand for the common currency, with the scores for services sentiment, industrial sentiment and business confidence all improving above forecast.
French GDP figures for the fourth-quarter of 2016 are the only notable Eurozone data releases today.
US Dollar
With Donald Trump expected to make a speech to Congress tomorrow, investors were reluctant to adjust their positions on the US Dollar yesterday. Even a better-than-expected durable goods orders figure for January failed to tip the mixed ‘Greenback’ one way or the other. Preliminary data suggests orders expanded 1.8% last month, although the positivity generated by the data was softened by the fact December’s decline was revised lower from -0.4% to -0.8%.
Canadian Dollar
Crude oil was posting strong gains on the commodity markets yesterday, but the Canadian Dollar was largely weak, making gains only against Pound Sterling. WTI crude was up 0.7%, while Brent climbed 1% higher. Like investors interested in the US Dollar, those with one eye on the Canadian Dollar are remaining cautious until President Trump has delivered his speech. He could reference trade, or more specifically the NAFTA deal between the US, Canada and Mexico, which may alter the outlook on the Canadian economy and make the ‘Loonie’ more or less appealing.
New Zealand Dollar
Net migration – a key driver of the New Zealand economy – has hit a monthly and all-time high according to the latest figures. January’s recorded 6,460 net arrivals is the best seasonally-adjusted figure for a single month, while year-on-year growth of 71,300 is the nation’s highest ever net arrivals figure. Although some are worried that the influx of new residents and visitors could place a strain upon New Zealand’s public finances, a report last month found that ‘economic worries about immigration are overblown’.
New Zealand trade balance figures for January are set for release shortly.
Data Released
February 28th 08.45 NZD Trade Balance (New Zealand dollars) (JAN) -NZ$3m
February 28th 11.01 GBP GfK Consumer Confidence Survey (FEB) -6
February 28th 11.30 AUD Private Sector Credit (YoY) (JAN)
February 28th 18.45 EUR French Gross Domestic Product (YoY) (4Q P) 1.1%