Australian Dollar
Poor Chinese inflation data undermined the Australian Dollar yesterday after showing the pace of consumer price growth slowed markedly in February. Prices declined -0.2% on the month, which put the brakes on annualised growth, with prices rising just 0.8% after increasing 2.5% in January. Market consensus had been for a slow to 1.7%. Food prices were largely to blame for the fall, with commodity and manufacturing costs rising considerably. So why did the ‘Aussie’ slide? Because investors were worried that the strong underlying figures had peaked, with analysts describing them as ‘unsustainable’.
Australian home loans data is set for release later today.
Sterling
AUD/GBP was stuck around opening levels, even though the Pound was weakening against most of its major peers. The only new UK data available was the Royal Institute of Chartered Surveyors (RICS) house price balance, which clocked in at 24%. Other than that, investors were left to focus on the recent disappointing Spring Budget and the fact Article 50 is likely to be triggered in the middle of next week.
There is a slew of UK data due out tonight, including figures for industrial and manufacturing production, construction output and the latest trade balance figures.
Euro
The Euro made mild gains for the majority of yesterday’s trade session, before rising bullishly early this morning after the latest European Central Bank (ECB) monetary policy meeting. The actual meeting saw the Governing Council leaving interest rates frozen once again, but the subsequent press conference with President Mario Draghi generated tailwinds for the Euro. Draghi revealed that growth and inflation forecasts had been raised and that the ‘sense of urgency’ surrounding the ECB’s attempts to stimulate the economy had gone. He also avoided answering a question about whether interest rates could rise before quantitative easing is stopped; something he has been firmly against previously.
German trade figures are expected to show the surplus remains almost as solid as previously, inching down -€800 million to €18 billion.
US Dollar
Demand for the Euro marginally softened the US Dollar yesterday, although the ‘Greenback’ still made strong gains versus many of its other peers. Bets of an interest rate hike from the Federal Reserve next week remained firm, with the futures market pricing in odds of 88.6%. The latest jobless figures printed around estimates; although initial claims were 5,000 higher than predicted at 243,000, this was still well below the 300,000 threshold that economists believe would indicate something was wrong in the labour market.
The vital US non-farm payrolls report will be released very early tomorrow morning. Unless this prints very poorly, there is very little chance the Federal Reserve will not hike rates next week, so a positive result here could see the US Dollar soaring.
Canadian Dollar
The Canadian Dollar was on mixed form yesterday although, considering what was going on in the oil markets, the ‘Loonie’ fared surprisingly well overall. WTI crude tumbled below US$50 per barrel for the first time in 13 weeks after an enormous increase in US crude stockpiles. Stocks had been expected to rise by 2 million barrels, but instead rose by 8.2 million. However, news that Finance Minister Bill Morneau was set to announce a fund to help grow small businesses and that the government was going to make it easier for immigrants to get skilled worker permits helped improve investor sentiment.
Canadian labour market data is released very early tomorrow morning; investors aren’t expecting a change in the overall employment rate, but the ‘Loonie’ could still move higher or lower depending upon whether the economy added or shed jobs in February.
New Zealand Dollar
The New Zealand Dollar was also hit by the surprising Chinese inflation data yesterday. A lack of domestic data compounded the problem, leaving investors with little incentive to buy the ‘Kiwi’.
New Zealand card spending figures are set for release this morning.
Data Released
March 10th 08.45 NZD NZ Card Spending (MoM) (FEB)
March 10th 11.30 AUD Home Loans (JAN) -1.0%
March 10th 18.00 EUR German Trade Balance (euros) (JAN) €18b
March 10th 20.30 GBP Total Trade Balance (Pounds) (JAN) -£3,100m
March 11th 00.30 CAD Net Change in Employment (FEB) 2.5k
March 11th 00.30 USD Change in Non-farm Payrolls (FEB) 190k