Australian Dollar
There was some sense of disappointment as Australian private sector credit failed to pick up as far as expected in January, clocking in at 4.9% rather than 5.0% on the year. However, as the Australian Dollar has seen some sustained weakness recently markets saw little reason to punish the antipodean currency further on Wednesday. With investors taking the opportunity to buy back into the weakened ‘Aussie’ this offered AUD exchange rates some degree of support, although downside pressure remains.
So long as the fourth quarter private capital expenditure figure shows steady growth this should limit any Australian Dollar weakness today.
Sterling
Markets were distinctly unsettled when the EU published the first draft of its withdrawal treaty, even though chief EU negotiator Michel Barnier noted that there were ‘no surprises’ within the text. This left the Pound on a weaker footing against its rivals as worries over the UK’s future outside the EU picked up once again. With anticipation already mounting ahead of Prime Minister Theresa May’s latest Brexit speech, due ahead of the weekend, support for Sterling has been distinctly limited.
Even so, if January’s UK net consumer credit data proves encouraging this could offer GBP exchange rates a temporary rallying point.
Euro
In another negative sign for the Eurozone February’s consumer price index showed another dip in inflationary pressure, easing to 1.2% on the year. Naturally this encouraged bets that the European Central Bank (ECB) will maintain its current dovish policy bias for longer, with inflation showing no tangible progress towards the central bank’s 2% target. Even so, as the German unemployment rate held steady and the French gross domestic product accelerated this helped to shore up the Euro somewhat.
With forecasts pointing towards a fresh dip in the Eurozone unemployment rate the Euro could return to a stronger footing this evening.
US Dollar
While the second estimate of the fourth quarter US gross domestic product was unexpectedly revised lower this was not enough to particularly weigh down the US Dollar. As growth remains firm this weaker showing is unlikely to deter Federal Reserve policymakers from pursuing a more aggressive pace of monetary tightening. With investors still encouraged by the more optimistic note of new Fed Chair Jerome Powell’s comments before Congress USD exchange rates were able to hold onto a general uptrend.
However, a weaker showing from tonight’s personal consumption expenditure core figure could weigh down the US Dollar, given that this is the Fed’s preferred measure of inflation.
Canadian Dollar
January’s industrial product price index showed a smaller rebound on the month than hoped, to the detriment of the Canadian Dollar. Demand for CAD also remained rather muted overnight thanks to another day of softness on the oil market. With signs pointing towards a weakening in demand within some of the major oil consuming economies Brent crude came under renewed pressure, leaving CAD exchange rates with little in the way of support.
An uptick in the latest manufacturing PMI may offer CAD exchange rates a rallying point tonight, though.
New Zealand Dollar
A modest improvement in the ANZ activity outlook for February helped to limit the downside potential of NZD exchange rates yesterday. Even so, with market risk appetite generally diminished by the more hawkish nature of Fed Chair Powell’s comments the New Zealand Dollar struggled to find any particular traction against its rivals. With domestic business confidence still muted the outlook for the domestic economy remains less than optimistic.
With the four quarter terms of trade index forecast to show a slight easing on the quarter NZD exchange rates could extend their losses today.
Data Released
March 1st 07:45 NZD Terms of Trade Index (QoQ) (4Q) 0.5%
March 1st 08:30 AUD Manufacturing PMI (FEB) 57
March 1st 10:30 AUD Private Capital Expenditure (4Q) 1.0%
March 1st 19:30 GBP Net Consumer Credit (JAN) 1.4 billion
March 1st 19:30 EUR Eurozone Unemployment Rate (JAN) 8.6%
March 1st 23:30 USD Personal Consumption Expenditure Core (YoY) (JAN) 1.5%
March 2nd 00:30 CAD Manufacturing PMI (FEB) 55.4