Australian Dollar
Yesterday’s loans data disappointed investors, showing that fewer homes and businesses were taking out finance in February. This could suggest confidence in the economy is weakening, which may have a knock-on effect on employment, wage growth and consumer spending. Home loans declined -0.5% against predictions of no change, while investment lending fell -5.9% – a significant drop after growth of 4.6% in January.
The NAB business confidence survey results for March could help undo some of the damage from yesterday’s investment lending figures, which would support the ‘Aussie’ higher.
Sterling
There may not have been any UK data released yesterday, but the Pound was advancing across the board, pushing the AUD/GBP exchange rate significantly lower. Investors saw an opportunity to speculate on the Pound, which ended last week down after a run of poor domestic data. The chance for it to recover prompted a wave of interest.
Expectations that today’s inflation data would also show that the pace of consumer price growth stalled in March, therefore easing pressure on household budgets, also improved sentiment towards Sterling, even if that does also mean that the Bank of England (BoE) has an excuse not to hike interest rates.
Euro
The Euro was largely in positive territory yesterday, but gains were largely muted. The latest Sentix investor confidence index for the Eurozone performed well, with the overall measure rising to 23.9; its highest score since August 2007. The current situation and expectations indices both hit their highest levels since January 2008 of 28.8 and 19.3 respectively. But with a speech from US Federal Reserve Chair Janet Yellen on the horizon, investors were cautiously waiting to see how the outlook on US monetary policy might change before committing themselves.
Today’s ZEW sentiment surveys will give an indication of how business leaders in Germany and across the Eurozone feel about the state of the economy; rising confidence suggests the accelerating Eurozone recovery could be set to speed up even more.
US Dollar
The US Dollar was mixed during yesterday’s trade session; investors were waiting for Janet Yellen’s speech. With the Federal Reserve having surprised by talking about shrinking the balance sheet during the most recent monetary policy meeting, there were now two big questions investors wanted answers for. Shrinking the balance sheet could actually slow the pace of monetary policy, as it might make it more expensive for companies and the government to borrow money, which could see the Fed decide not to raise interest rates so quickly to counteract the impact.
There is no notable US data left on the calendar for publication today, but the US Dollar is likely to continue reacting to Janet Yellen’s latest speech.
Canadian Dollar
Bullishness in the oil markets and a strong housing starts figure supported the Canadian Dollar against the majority of its peers yesterday. The number of new building projects in March clocked in at 253,700 against forecasts of 214,500. WTI and Brent crude were both trading 1.3% higher than opening levels, thanks to news that Libya’s largest oilfield had shut down again. Continued tension over the airstrikes conducted by the US on Syria also helped push crude prices higher.
New Zealand Dollar
There was no domestic data on the calendar for New Zealand yesterday, but the New Zealand Dollar was nonetheless trending up against most of its peers. With markets awaiting the latest Yellen speech, both the Euro and US Dollar were offering only lacklustre movement, giving investors the opportunity to explore the riskier ‘Kiwi’.
New Zealand card spending data released today could have an impact upon NZD.
Data Released
April 11th 08.45 NZD NZ Card Spending (MoM) (MAR)
April 11th 11.30 AUD NAB Business Confidence (MAR) 7.4
April 11th 18.30 GBP Core Consumer Price Index (YoY) (MAR) 1.9%