Australian Dollar
A more positive assessment of Australia’s housing market than many economists have offered supported the Australian Dollar higher yesterday. BIS OE economists claimed that the Organisation for Economic Co-operation and Development (OECD) was being overly dovish with its forecasts for the sector. The OECD stated recently there was a one-in-five chance of the housing market entering recession, but BIS OE claimed this was based upon unlikely assumptions that monetary policy would be tightened significantly. News that the outlook for the housing market may not be as dire as first believed helped support the Australian Dollar higher.
The Reserve Bank of Australia (RBA) will announce its latest monetary policy decisions today.
Sterling
The Australian Dollar to Pound exchange rate advanced yesterday, with Sterling remaining weak virtually across the board after Friday’s data cast doubts over the UK’s economic outlook. The weaker-than-expected services PMI was still on the minds of investors, as it suggested the sharp uptick in economic activity following the referendum may have run its course. Additionally, French President Francois Hollande claimed that the UK could not leave the European Union and retain access to any of the benefits of being a member. This could complicate Theresa May’s plans to achieve some kind of free-trade access to the common market, leaving ‘Hard Brexit’ as the only option open to the UK government.
Like-for-like retail sales figures are set for release today.
Euro
The Euro was on mixed form yesterday, making only soft gains versus many of its peers and larger losses versus others. Data also offered positives and negatives. The Germany construction and retail PMIs both improved, while the Sentix investor confidence index climbed from 17.4 to 20.7 against forecasts of a smaller increase to 18.5. However, weak performances by the retail sectors in France and Italy dragged on the overall Eurozone PMI, taking it into contraction territory with a score of 49.9. Meanwhile, final-quarter GDP figures for Greece showed a markedly larger-than-expected contraction.
Finalised Eurozone GDP figures for the fourth quarter of 2016 are set for release today.
US Dollar
The US Dollar largely advanced yesterday, gradually notching up strong gains on the back of market expectations of an interest rate hike during this month’s Federal Open Market Committee (FOMC) meeting. Markets were pricing in odds of 88.6% that policy would be tightened after Fed Chair Janet Yellen claimed it would be ‘appropriate’ so long as employment and inflation data in the interim performed well.
US trade balance figures are set for release very early tomorrow morning.
Canadian Dollar
A strong US Dollar kept the Canadian Dollar on the decline yesterday. The ‘Loonie’ suffered as the strength of its North American cousin threatens to push oil prices lower and curb the revenue of exporters sending goods over the border to the United States. Additionally, lower growth forecasts from the Chinese government weakened the oil markets as investors worried that targeting a slower economy would mean that oil consumption in the Asian superpower would fall.
Canadian trade figures are set for release just after the turn of midnight tomorrow.
New Zealand Dollar
The New Zealand Dollar slumped yesterday, weakened by a strong US Dollar and unimpressive domestic data. Building permits posted something of a recovery in January, with the number of consents rising 0.8%, although after December’s -7.9% drop this wasn’t much of an improvement. Economists expressed concern over the slow pace of building, given New Zealand’s strong levels of migration and population growth; the population increased by 100,000 in 2016, while just over 30,000 new homes were built. In the five months to January this year, approvals for new homes declined -15%.
The latest dairy auction takes place later today – should prices slump again, as happened at the event a fortnight ago, the New Zealand Dollar is likely to slide.
Data Released
March 7th NZD Dairy Auction Avg. Winning Price MT (FEB 07)
March 7th 11.01 GBP BRC Sales Like-For-Like (YoY) (FEB) -0.5%
March 7th 14.30 AUD Reserve Bank of Australia Rate Decision (MAR 07) 1.50%
March 7th 21.00 EUR Eurozone Gross Domestic Product s.a. (YoY) (4Q F) 1.7%
March 7th 00.30 USD Trade Balance (JAN) -US$48.0b
March 7th 00.30 CAD International Merchandise Trade (Canadian dollar) (JAN) 0.75b