Australian Dollar
The Australian Dollar was on strong form yesterday as investors continued to pile out of the US Dollar. Domestic data proved mixed, although the more important release – the Westpac consumer confidence index for March – showed that sentiment held steady. Household outlook edged higher from 99.6 to 99.7; within touching distance of the 100 level where optimists outnumber pessimists. Other data showed new motor vehicle sales slumped -2.7% on the month in February and -4.1% on the year.
High-profile Australian labour market data could help support the Australian Dollar today.
Sterling
AUD/GBP exchange rates advanced yesterday, although Sterling was recording strong gains elsewhere. With the Pound having slumped on Tuesday due to market fears over the impending Brexit, investors who had bet on GBP weakening were taking profit on their good fortune. This involved buying back borrowed Sterling at a weaker rate than when they originally sold it, allowing them to profit from the initial trade. It was clear this was what was driving Sterling higher, as the day’s labour data showed worse-than-expected wage growth of 2.2% in the three months to January.
The Bank of England (BoE) will announce its latest monetary policy decisions tonight. Markets are not expecting a rate hike, but they will be looking for signs that policymakers aren’t comfortable leaving inflation to overheat for much longer.
Euro
Voting was ongoing in the Dutch election yesterday, which kept the Euro largely on the decline versus its major peers. Polls showed voter turnout was 6% higher than the previous election, which may have suggested people were coming out in force to prevent the far-right Geert Wilders from securing the most votes, or that Wilders has motivated usually apathetic voters to cast ballots in his favour this time round. The uncertainty kept the common currency on the decline, despite little demand for the US Dollar, to which the Euro has a negative correlation.
Finalised Eurozone consumer price index figures for February are released this evening. Investors will be hoping for an upwards revision to earlier estimates for core inflation, as this would put more pressure on the European Central Bank (ECB) to consider unwinding some of its enormous monetary stimulus.
US Dollar
Investors continued to sell out of the US Dollar yesterday ahead of this morning’s announcement of Federal Reserve policy decisions. Headline data was released, but it was largely ignored as the markets had bigger things to focus on. Ecostats performed as expected, with overall consumer price growth accelerating from 2.5% to 2.7% on the year and core price growth dipping from 2.3% to 2.2%. Advance retail sales growth slowed from an upwardly-revised 0.6% to 0.1%.
The Fed’s latest policy decisions have already been announced, but will continue to impact the US Dollar for the remainder of today’s session.
Canadian Dollar
With the US Federal Reserve at the centre of global market focus, there was little appetite for the Canadian Dollar yesterday, even if crude oil had sharply rebounded from its recent lows. Brent crude was up 1.3%, while WTI had recovered 1.4%. However, markets wanted to see if the Federal Reserve were planning on raising interest rates two more times this year, as markets had expected, or three times.
The only Canadian data on offer today is the low-importance international securities transactions report.
New Zealand Dollar
The New Zealand Dollar was largely on strong form yesterday, helped by warming risk appetite and some positive domestic data. Figures showed that the fourth-quarter current account deficit had shrunk further-than-expected, undercutting forecasts of -NZ$2.42 billion by NZ$90 million. As a percentage of GDP, the deficit remained at -2.7%.
Fourth-quarter New Zealand GDP figures are released this morning.
Data Released
March 16th 05.00 USD FOMC Rate Decision (Upper Bound) (MAR 15) 1.00%
March 16th 08.45 NZD Gross Domestic Product (YoY) (4Q)
March 16th 11.30 AUD Employment Change (FEB) 16k
March 16th 21.00 EUR Eurozone Consumer Price Index – Core (YoY) (FEB F) 0.9%
March 16th 23.00 GBP Bank of England Rate Decision (MAR 16) 0.25%
March 16th 23.30 CAD International Securities Transactions (Canadian dollar) (JAN) CA$9.45b