Australian Dollar
The Australian Dollar was largely on strong form towards the end of the week, although Saturday morning’s US jobs data began to soften the ‘Aussie’s gains. The Australian Dollar held on, however, buoyed by the fact that a rate hike has been virtually priced-in to the ‘Greenback’. This could see USD doing very little after next week’s policy meeting, even if rates are hiked, so in some ways the downside risks to AUD have actually lessened on the back of the latest positive American data. Investors were confident enough that a hike wouldn’t cause huge waves that they were still buying into the risky ‘Aussie’, keeping it on strong form against several of its peers, including the ‘Greenback’.
Australian labour market data is set for release on Thursday which, if positive, could help protect the Australian Dollar from depreciation should the likely Fed hike strengthen the US Dollar.
Sterling
Factory output may have risen at the fastest pace in seven years in the three months to the end of January, but the Pound remained unimpressed on Friday and AUD/GBP exchange rates made strong gains. The rest of the UK’s data was largely mixed. Figures showed a smaller-than-expected trade deficit of -£1.97 billion, while construction output clocked in above forecast at 2% year-on-year instead of 0.2% as predicted. Manufacturing and industrial production disappointed on a monthly basis, however. Additionally, the National Institute for Economic and Social Research (NIESR) GDP estimate clocked in at 0.6% for the three months until February, suggesting the economy was beginning to lose pace.
The turn of midnight on Friday will see the Bank of England (BoE) announcing its latest monetary policy decisions.
Euro
The Euro was supported higher on Friday after German trade data showed strong domestic demand in the Eurozone’s powerhouse economy during January. Exports saw a strong rise, but imports soared even further, cutting the current account surplus in half. Germany’s enormous surplus, formerly €24.8 billion and now €12.8 billion, has often created tension amongst Eurozone officials, who have accused the country of hoarding its windfalls instead of channelling them into stimulating demand. The fact it is now shrinking suggests the Eurozone could be set to receive a boost from its economic engine in the near-term.
Tomorrow sees the release of the German ZEW economic sentiment survey.
US Dollar
Rate hike bets for this week reached 93% early on Saturday morning after February’s non-farm payroll figures showed job creation of 235,000 against forecasts of 190,000. This was enough to push the unemployment rate down from 4.8% to 4.7% as had been expected, while January’s payrolls figures surprised with an upwards revision from 227,000 to 238,000. Average hourly earnings was revised up to 0.2% for January and reprinted at the same level in February.
The Federal Reserve announces is monetary policy decisions early on Thursday morning. A rate hike seems as good as guaranteed.
Canadian Dollar
Strong labour market data wasn’t enough to put the Canadian Dollar on a broad uptrend on Saturday, with the ‘Loonie’ unable to gain traction versus the Australian Dollar, New Zealand Dollar and Euro. A combination of above-forecast job creation and a surprise fall in the participation rate saw the unemployment rate unexpectedly fall from 6.8% to 6.6%. 15,000 jobs were added to the economy in February – six times what was forecast – and there was a huge shift towards full-time work, with part time employment falling -89,800 and full time rising 105,100.
Thursday’s existing homes sales data for February is the most high-profile Canadian release on the economic calendar this week.
New Zealand Dollar
Despite the strong US rate hike bets, the New Zealand Dollar was able to make strong advances on Friday. Partly supported for the same reasons as the Australian Dollar, the ‘Kiwi’ also found support from expectations that the fourth quarter of 2016 saw GDP grow 0.75% – another strong expansion, even if it represents a slowdown on the pace of 1.1% seen in Q3. The large earthquake seen in November is likely to have dragged on growth, as is slowing demand in the manufacturing sector. Nonetheless, investors were feeling optimistic regarding the high-yield New Zealand Dollar.
Those fourth-quarter New Zealand GDP figures will be released on Thursday.
Data Released
March 14th 22.00 EUR German ZEW Survey (Economic Sentiment) (MAR) 13
March 16th 01.00 CAD Existing Home Sales (MoM) (FEB)
March 16th 06.00 USD Federal Open Market Committee Rate Decision (MAR 15) 1.00%
March 16th 09.45 NZD Gross Domestic Product (YoY) (4Q)
March 16th 12.30 AUD Employment Change (FEB) -13k
March 17th 00.00 GBP Bank of England Rate Decision (MAR 16) 0.25%