Weaker Chinese Lending Weighs on Australian Dollar
Support for the Australian Dollar proved limited in the wake of Sunday’s underwhelming Chinese lending data. With the Chinese economy continuing to show signs of a slowdown investors were encouraged to adopt a more risk-averse outlook, diminishing support for AUD exchange rates. As the US and China appear no closer to a trade agreement worries over the global trade outlook persisted to the detriment of the Australian Dollar.
A fresh deterioration in the NAB business confidence index could see AUD exchange rates lose further ground this morning.
Brexit Speculation Drives Pound Volatility
Speculation over Brexit prompted volatility for GBP exchange rates last night. Investors were initially concerned by the lack of progress towards a mutually agreeable deal, with the issue of the Irish backstop remaining unresolved. However, reports that Theresa May would head to Strasbourg for a fresh meeting with European Commission President Jean-Claude Juncker saw the Pound strengthen sharply. Although May’s Brexit proposal is still at risk of defeat in the upcoming parliamentary vote this was not enough to limit the Pound at this stage.
The mood towards the Pound could improve further this afternoon if January’s gross domestic product data shows a rebound in growth on the month.
German Production Contraction Dents Euro
German industrial production saw a surprise contraction on the month in January, raising fresh worries over the outlook of the Eurozone’s powerhouse economy. Although the German trade surplus still saw a widening on the month this was not enough to limit Euro weakness last night. As the German economy still appears on course to lose further momentum in the first quarter of 2019 EUR exchange rates returned to a downtrend.
More dovish commentary from European Central Bank (ECB) policymakers could drive the single currency lower in the near future.
US Dollar Slumps in spite of Retail Sales Improvement
A surprise uptick in January’s US advance retail sales figure failed to give USD exchange rates a leg up overnight. The modest 0.2% growth in sales was not enough to outweigh the significant 1.5% contraction seen in December, limiting the positive impact of the data. With doubts over the prospect of an imminent US-China trade agreement mounting the US Dollar was left on a generally weaker footing against its rivals.
However, a steady reading from tonight’s consumer price index may help USD exchange rates to recover some ground.
Oil Uptick Fails to Benefit Canadian Dollar
While oil prices picked up at the start of the week the Canadian Dollar struggled to follow suit. As worries over the global growth outlook persisted this left CAD exchange rates exposed to selling pressure. With the Bank of Canada (BOC) looking set to take an increasingly cautious outlook in the months ahead the appeal of the Canadian Dollar was naturally limited.
In the absence of any Canadian data releases support for CAD exchange rates is likely to prove limited in the near term.
New Zealand Dollar Shakes Off Card Spending Slowdown
As retail card spending showed a smaller slowdown on the month than forecast this limited the downside pressure on the New Zealand Dollar. With New Zealand consumers still spending confidence in the economic outlook improved, even in the face of global growth concerns. The weakness of the US Dollar also helped to shore up NZD exchange rates overnight.
This morning’s ANZ truckometer could give the New Zealand Dollar a fresh boost, provided the index points towards increased economic activity.
March 12th 08:00 NZD ANZ Truckometer (MoM) (FEB)
March 12th 11:30 AUD NAB Business Confidence (FEB) 3
March 12th 20:30 GBP Gross Domestic Product (MoM) (JAN) 0.2%
March 12th 23:30 USD Consumer Price Index (YoY) (FEB) 1.6%