Australian Dollar
The world’s safe-haven assets were performing well yesterday, giving the Australian Dollar a chance to notch up noticeable gains versus most of its peers. There was no domestic data released, but with the Euro and Pound both rocked by the official beginning of Brexit and the US Dollar remaining directionless, markets were betting on riskier currencies. This came despite a warning from Citi that downside pressure on iron ore prices was likely to increase thanks to the opening of new mines in China.
New home sales data and job vacancies figures for February are the only data releases scheduled for today.
Sterling
The signed letter informing the EU of the UK’s intention to begin divorce talks was delivered to European Council President Donald Tusk yesterday. This means the Brexit process has officially begun and AUD/GBP fluctuated wildly in the aftermath. Markets were unsure how to price this development into Sterling; it had been a long time coming and talks may not start for another month or two, meaning volatility should have been minimal. Many analysts had forecast little impact, but investors closing bets on Sterling weakening now that the final pre-scheduled risk event for some time had passed helped push AUD/GBP lower at one point in the session, before the trajectory reversed and gains became losses.
There is no UK data set for release, although with Article 50 now triggered, it is likely Sterling’s movement will remain correlated to political developments today.
Euro
The reality of Brexit weighed heavily upon the Euro yesterday, with the common currency performing much worse against the Pound. A recent survey by the German Chambers of Commerce and Industry (DIHK) found that many German businesses were expecting Brexit to harm trade. The UK is a large export market for Germany, supporting around 750,000 jobs according to DIHK, but 10% of companies were planning to withdraw investment from the UK and 40% expect business to weaken as the Brexit negotiations begin.
German consumer price data will be published today; even if the Euro has recovered from the Article 50 fallout, it could still have further to fall, given that forecasts are for slowing price growth.
US Dollar
Markets were in limbo when it came to the US Dollar yesterday. Frantic reassessment of the ‘Trump rally’ had abated, leaving the ‘Greenback’ recording more minor losses versus a number of its peers. The weakness in Pound Sterling and the Euro supported the ‘Buck’, giving traders fewer viable alternatives to distract from USD. However, until Trump puts his stimulus and tax plans into action or the Federal Reserve gives more clarity on the interest rate outlook, markets are unsure how to position themselves on the US Dollar.
Fourth-quarter US GDP figures are set for release today.
Canadian Dollar
There was no domestic data released yesterday, but the volatility on the currency markets was dragging the Canadian Dollar lower. This was despite news that Libya’s oil production had been cut by a pipeline halt, counterbalancing overproduction from other members of the Organisation of the Petroleum Exporting Countries (OPEC). Investors were awaiting the day’s US crude oil inventories figures, however, knowing that another strong rise here would quickly undermine the latest Canadian Dollar gains. Investors were also disappointed that a speech by Bank of Canada (BOC) Governor Stephen Poloz contained no references to monetary policy.
Industrial product price figures, as well as the raw materials price index, are set for release tonight.
New Zealand Dollar
The New Zealand Dollar was enjoying a surge in appetite yesterday while many of the other majors were left unappealing. Investors took the opportunity to buy the high-risk ‘Kiwi’ while safe-havens including the US Dollar and Euro were both weakening. There was no domestic data to support gains further.
Data Released
March 30th 11.00 AUD HIA New Home Sales (MoM) (FEB)
March 30th 23.00 EUR German Consumer Price Index (YoY) (MAR P) 1.9%
March 30th 23.30 USD Gross Domestic Product (Annualized) (4Q T) 2%
March 30th 23.30 CAD Industrial Product Price (MoM) (FEB)