Consumer Confidence Decline Weighs on Australian Dollar
The mood towards the Australian Dollar soured yesterday as March’s Westpac consumer confidence index dropped sharply. Investors were caught off guard as the index fell -4.8% on the month, suggesting that consumers are also adopting a cautious outlook in the face of weaker economic data. As lower levels of confidence could limit spending as well as economic growth this prompted AUD exchange rates to trend lower.
Even so, an uptick in March’s consumer inflation expectation survey may encourage the Australian Dollar to recover some of its lost ground this morning.
Brexit Deal Rejection Fails to Drive Pound Losses
It came as little surprise to markets when MPs voted to reject Theresa May’s revised Brexit deal. As May faced defeat once again this raised a fresh sense of uncertainty over the UK’s future relationship with the EU. The Pound returned to a stronger footing in the wake of the news nevertheless. With investors confident that Parliament would move to rule out a no-deal Brexit the negative impact of the vote was limited, especially in the wake of the previous day’s sharp decline.
Even if the latest RICS house price index surprises to the upside this is unlikely to influence GBP exchange rates over the day’s Brexit-based developments.
Euro Gains Ground as Eurozone Production Beats Forecast
Better-than-expected Eurozone industrial production data encouraged the Euro to push higher against its rivals last night. Following on from German’s weaker production figures investors were pleasantly surprised to find that output had accelerated sharply on the month. This shored up confidence in the underlying health of the Eurozone economy, in spite of the European Central Bank’s (ECB) recent downgrades to its growth forecasts.
Confirmation that the German consumer price index picked up in February could offer the single currency an additional boost this evening.
US Dollar Softens in spite of Positive Goods Orders Figure
Although January’s durable goods orders avoided a forecast contraction this failed to offer support to the US Dollar overnight. As growth in orders still slowed significantly on the month, suggesting a less confident consumer outlook, this gave investors limited incentive to favour the US Dollar. Markets remain wary of the prospect of the US economy losing momentum in the first quarter of 2019, even as construction spending saw a rebound on the month.
Any decline in February’s import and export price index data may encourage further selling of the US Dollar tonight.
Falling US Oil Inventories Boost Canadian Dollar
A sharp decline in US crude oil inventories offered a boost to the Canadian Dollar during last night’s European session. With Brent crude trending above US$67 per barrel the mood of investors turned bearish, to the benefit of the commodity-correlated Canadian Dollar. While confidence in the strength of the Canadian economy remains limited this uptick in oil prices was still enough to give CAD exchange rates a leg up.
Tonight’s new housing price index may weigh heavily on the Canadian Dollar, though, if the housing market continues to show signs of stagnation.
Weaker Food Price Index Limits New Zealand Dollar Support
February’s food price index left the New Zealand Dollar on a downtrend as price pressures failed to accelerate as hoped. With prices showing growth of just 0.4% on the month the outlook for inflation appears underwhelming, increasing the likelihood of the Reserve Bank of New Zealand (RBNZ) maintaining a dovish policy outlook. Coupled with a general decline in market risk appetite this underwhelming data saw the New Zealand Dollar fail to find any support.
In the absence of any fresh domestic data today the mood of NZD exchange rates is unlikely to improve.
March 14th 11:00 AUD Consumer Inflation Expectation (MAR) 4%
March 14th 11:01 GBP RICS House Price Balance (FEB) -24%
March 14th 18:00 EUR German Consumer Price Index (YoY) (FEB F) 1.6%
March 14th 23:30 CAD New Housing Price Index (YoY) (JAN) 0%
March 14th 23:30 USD Import Price Index (YoY) (FEB) -1.6%