Australian Dollar Surges on Reports of a Coronavirus Breakthrough

Australian Dollar (AUD) Soars on Coronavirus Vaccine Reports

After taking a slight knock in early trade in the wake of some dovishness from Reserve Bank of Australia (RBA) Governor Philip Lowe, the Australian Dollar (AUD) rocketed higher during the European session on Wednesday following reports of a ‘significant breakthrough’ in the development of a vaccine for the coronavirus.

However the Australian Dollar may be forced to give up some of these gains later this morning as economists are forecasting a large slump in Australia’s latest retail sales figures, courtesy of the bush fires which ravaged the country through December.

Pound (GBP) Retreats in Spite of Upbeat Services PMI

The Pound (GBP) initially rallied on Wednesday as January’s s final services PMI printed even higher than a preliminary estimate.

IHS Markit reported the UK’s services PMI rocketed up from 50 to 53.9 last month, outpacing an initial estimate that the index would rise to 52.9 and printing at its highest level since September 2018.

However, the Pound struggled to maintain these gains, pulling back overnight as it was knocked by lingering Brexit jitters.

In the absence of any notable data today the continued focus on Brexit is likely to limit the appeal of Sterling.

Euro (EUR) Slumps on Dire Retail Sales Figures

The Euro (EUR) was put on the defensive mid-week as markets were left aghast by the publication of Eurozone retail sales figures.

According to Eurostat, sales growth collapsed from 0.8% to -1.6% in December, the largest slump in sales growth since 2008.

Looking ahead, the Euro may recoup some ground later this evening if Germany reports a rebound in factory orders last month.

US Dollar (USD) Surges on Upbeat Data

The US Dollar (USD) rocketed higher in overnight trade on Wednesday is response to a bumper ADP payroll report. The data, which is often used as an earlier indicator for the more influential non-farm payroll figures, suggested the US private sector added 291,000 jobs last month, the largest expansion since 2015.

Coming up, will a hawkish outlook from the Federal Reserve’s Robert Kaplan push the US Dollar even higher overnight?

Canadian Dollar (CAD) Supported by Oil Rally

The Canadian Dollar (CAD) ticked higher on Wednesday, with the commodity-linked currency tracking oil prices higher after WTI crude jumped over 3% on reports of a breakthrough in the development of a coronavirus vaccine.

New Zealand Dollar (NZD) Muted Following Mixed Jobs Report

The New Zealand Dollar (NZD) was mostly rangebound through yesterday’s trading session as New Zealand’s latest jobs report made for some mixed reading.

While headline unemployment unexpectedly fell from 4.2% to 4% in the latest quarter of 2019, this came mostly from a shrinking pool of eligible workers as employment growth stagnated through Q4.

Data Releases

February 6th 10:30 AUD Trade Balance (Dec) AU$5.95bn
February 6th 10:30 AUD Retail Sales (Dec) -0.2%
February 6th 17:00 EUR German Factory Orders (Dec) 0.6%
February 6th 17:00 USD Fed Kaplan Speech

Louisa Heath