Australian Dollar
The latest rate decision from the Reserve Bank of Australia (RBA) left the ‘Aussie’ broadly stronger. While the bank left interest rates on hold, as expected, it was the cautiously optimistic commentary accompanying the decision that gave AUD exchange rates a boost. There was little to get really excited about but one of the stand-out additions to the policy statement was that ‘most measures of business and consumer confidence are at or above average’.
In the hours following the announcement the Australian Dollar recorded and consolidated gains against the Pound, US Dollar and Euro. China’s trade balance and inflation figures are likely to create additional AUD volatility as the week continues.
Sterling
The Pound’s bad week continued on Tuesday as the British Retail Consortium’s Like-for-Like sales report detailed a slump in consumer spending in February. The -0.4% year-on-year decline was steeper than the -0.2% drop anticipated.
Sterling also spiralled lower against a number of its rivals as investors focused on the upcoming Spring Budget. If the budget highlights new spending cuts and focuses on the fact that growth is likely to slow as 2017 continues, the Pound could hit new multi-week lows.
Euro
The perceived rising odds of right-wing Presidential candidate Marine Le Pen winning the upcoming French election aided the Australian Dollar’s gains against the Euro on Tuesday. Demand for the common currency was also limited by the news that German Factory Orders dropped by -0.8% on the year in January, defying forecasts for a 4.3% gain.
While the upcoming German Industrial Production report could have an impact on EUR trading in the hours ahead, the ECB’s interest rate decision on Thursday will be the week’s main cause of Euro volatility.
US Dollar
With Federal Reserve interest rate hike bets staying high, the US Dollar’s run of gains continued on Tuesday. In the build up to the March Fed interest rate decision, it would take a rather dramatic development to unseat USD exchange rates.
As the ADP Employment Change figure is sometimes viewed as offering an insight into the more influential Non-Farm Payrolls report (due out at the end of the week) tomorrow’s result could weigh on the US Dollar slightly if it comes in at or below forecasts. As it stands, the US economy is expected to have added 185k positions in February, down from 246k positions in January.
Canadian Dollar
Better-than-expected domestic trade data helped the Canadian Dollar firm against the US Dollar and Pound during Tuesday’s North American session. Gains were a little limited however as the Ivey Purchasing Managers Index for February dropped from 57.2 to 55.0.
If today’s Canadian housing reports impress, the Canadian Dollar could extend gains.
New Zealand Dollar
A concerning slide in dairy prices sent the New Zealand Dollar trending lower almost across the board as the week progressed. The ‘Kiwi’ was able to hold its own against the Pound however as the British currency came under significant strain ahead of the UK budget statement.
Data Released
March 8th CNY Trade Balance (FEB)
March 8th 07:00 EUR German Industrial Production n.s.a. and w.d.a. (YoY) (JAN) -0.6%
March 8th 13:15 USD ADP Employment Change (FEB) 185k
March 8th 13:15 CAD Housing Starts (FEB) 200.0k
March 8th 13:15 CAD Building Permits (MoM) (JAN)