Australian Dollar
The Australian Dollar was largely bullish yesterday. Market expectations of an interest rate hike from the US Federal Reserve were so high traders had already started selling the US Dollar. With tighter US monetary policy largely priced in, markets are looking elsewhere for yield, boosting the Australian Dollar. The rally came despite a lack of any notable Australian data, with the ‘Aussie’ gaining even though iron ore posted its biggest seven-day slump in sixteen weeks.
Consumer and business confidence scores will be released today.
Sterling
Despite its bullish form across the board, the Australian Dollar was unable to rise against the Pound yesterday, with AUD/GBP trending -0.1% below opening levels. Sterling was rising bullishly, even though Scottish First Minister Nicola Sturgeon announced that there will be a second Scottish independence referendum – assuming Westminster agrees to it. However, Sturgeon claimed the vote would be held after the terms of Brexit are known; likely between autumn 2018 and spring 2019. Markets were happy that Indyref2 would therefore not be an immediate threat and that there was a chance the terms of Brexit would be favourable enough to persuade Scots to stay.
Euro
The Euro was slumping yesterday in anticipation for this week’s Dutch elections. The outcome of the vote will be a good indicator of the strength of rising populism in the Eurozone. The far-right anti-Islam Party of Freedom (PVV), led by Geert Wilders, had risen in popularity to briefly lead the polls, although it has since edged lower and all established parties have refused to form a coalition. If the PVV were to lead the vote, this would bode ill for other elections taking place across the Eurozone later in the year.
German business sentiment figures will be released today; the Euro could recover if the influential ZEW survey shows improving optimism.
US Dollar
The markets have expected the Federal Reserve to tighten monetary policy this week for a while now; bets were at 95.2% at the time of writing. With the markets having already bought up the US Dollar on the expectation of higher interest rates, there is little room for it to rise further when those rates actually arrive. For this reason, traders decided yesterday was the best time to take profit and sell the ‘Greenback’. This caused it to weaken against the majority of its peers.
With the Fed meeting just around the corner, today’s low-impact US data is highly unlikely to have any impact upon the US Dollar.
Canadian Dollar
The Canadian Dollar was weighed down by crude oil prices yesterday. The ‘Loonie’ declined versus a number of its peers thanks to a sixth trading session of losses on the oil markets, with crude at three-month low. Weakening US Dollar exchange rates did little to prevent further losses. Even predictions from a Canadian think tank, suggesting Alberta is set to grow faster than official government forecasts, failed to cheer investors.
There is no influential Canadian data set for release today.
New Zealand Dollar
The New Zealand Dollar was mostly making gains yesterday, although nowhere near to the same extent as the Australian Dollar. Cold appetite for the US Dollar helped the ‘Kiwi’, but there was little support from elsewhere. Domestic data was disappointing, with house sales continuing to fall by over -14% in February as in January, while food prices grew just 0.2% month-on-month after a 2.8% increase at the beginning of the year.
There is no domestic data due from New Zealand today, but the ‘Kiwi’ could still be influenced by Chinese data, including industrial production figures.
Data Released
March 14th 11.30 AUD NAB Business Confidence (FEB) 8.75
March 14th 13.00 CNY Industrial Production YTD (YoY) (FEB) 6.2%
March 14th 21.00 EUR German ZEW Survey (Economic Sentiment) (MAR) 13.1