Australian Dollar
Geopolitical concerns and firm US data kept the Australian Dollar on the decline on Friday. Markets were unsettled by the US carrying out airstrikes on Syria – the first direct military action by the country – in response to an alleged chemical attack by government forces on a rebel-held area. Russia backs the government and President Assad, so the strike by the US has significantly heightened tensions between the two world powers. Many investors therefore withdrew from risky assets and looked to safer havens including the Japanese Yen and gold, weakening the ‘Aussie’.
Australian employment data is set for release on Thursday.
Sterling
The AUD/GBP exchange rate managed to record small gains despite the Australian Dollar weakness, as the Pound was slumping virtually across the board. The glut of UK data released on Friday was wholly disappointing, with the trade deficit widening above forecast, construction output surprising forecasts of little growth with a -1.7% contraction, industrial and manufacturing continuing to decline for the second month in a row and the NIESR GDP estimate for the three months to March coming in at 0.5% instead of 0.6%.
UK consumer price figures for March are set for release tomorrow. Core prices are already level with the Bank of England’s (BoE) target, so any growth above this is likely to heighten calls for a rate hike.
Euro
Investors weren’t in the mood to buy the Euro on Friday, despite a run of positive data that showed better-than-expected German trade and industry figures. The US involvement in Syria was prompting traders to look for safer bets than the Euro, such as gold. As a result, the common currency declined, impervious to the news that Greece had agreed a new deal on reforms with its creditors, removing another barrier to the stricken nation’s next bailout payment.
The high-profile German economic sentiment survey from ZEW is released tomorrow. Rising sentiment amongst business leaders would improve the outlook for the Eurozone’s powerhouse economy and therefore for the whole of the currency bloc.
US Dollar
US labour market data disappointed on Friday, yet safe-haven demand helped keep the US Dollar in positive territory against a majority of its peers. The March iteration of the non-farm payrolls report showed an increase in employment of 98,000 – just over half the amount that had been forecast. Additionally, previous figures for the last two months were revised down by a combined -38,000. Many analysts were left confused by the fact the unemployment rate fell against expectations, dropping from 4.7% to 4.5% even though the participation rate remained flat at 63%. Economists put the discrepancy down to the disparities in the different surveys used to calculate the payrolls and unemployment.
Friday contains all of the week’s headline US data, including the University of Michigan confidence index for April.
Canadian Dollar
The Canadian Dollar was sent on a bullish charge on Friday, in stark contrast to its commodity brethren. Domestic employment data was largely positive – while an uptick in the participation rate pushed the unemployment rate up to 6.7%, the net change in employment showed an increase of 19,400 rather than the slow from 15,300 to 5,700 predicted. Additionally, crude oil prices had been driven higher by the latest developments in Syria; US intervention could have a negative effect on the country’s oil production, thereby lowering global supply and pushing up prices.
The Bank of Canada (BOC) will announce its next interest rate decision at midnight on Thursday. Markets are expecting no change, so the more important developments will be the April Monetary Policy Report and a press conference by BOC Governor Stephen Poloz.
New Zealand Dollar
The New Zealand Dollar weakened thanks to the cooling risk appetite affecting the markets on Friday. There was no domestic data to provide support, although the ‘Kiwi’ did manage to advance against the Pound thanks to the poor UK data and against the ‘Aussie’ because of the Australian Dollar’s greater market exposure to global sentiment.
There is no tier-one data due from New Zealand this week, but Chinese inflation figures on Wednesday are likely to have a marked impact upon the ‘Kiwi’ as well as the ‘Aussie’.
Data Released
April 11th 18.30 GBP Core Consumer Price Index (YoY) (MAR)
April 11th 19.00 EUR German ZEW Survey (Economic Sentiment) (APR) 14.07
April 12th 11.30 CNY Consumer Price Index (YoY) (MAR) 1%
April 13th 01.15 CAD BOC’s Poloz and Wilkins Hold Press Conference in Ottawa
April 13th 11.30 AUD Employment Change (MAR) 13.4k
April 14th 00.00 USD U. of Michigan Confidence (APR P) 95.6