Australian Dollar supported by RBA Rate Cut

Australian Dollar (AUD) Rallies Following RBA Rate Cut

The Australian Dollar (AUD) ticked higher overnight on Tuesday in the wake of the Reserve Bank of Australia’s (RBA) decision to cut interest rates to a new record low. While the move caught markets by surprise it lent support to the ‘Aussie’.

Looking ahead, the Australian Dollar could come under pressure today if Australia’s latest GDP figures report a slowing of domestic growth in the last quarter of 2019.

Pound (GBP) Lifted by Carney’s Words of Confidence

The Pound (GBP) enjoyed some modest support on Tuesday, buoyed by comments from Bank of England (BoE) Governor Mark Carney, who said the BoE was ready to tackle the threat posed by the coronavirus. GBP investors also welcomed the publication of the UK’s latest construction PMI yesterday, as the construction sector registered its first expansion in over a year in February.

Coming up, Sterling may attempt to extend its recovery later today if the final UK services PMI confirms the all-important service sector grew at a robust pace last month.

Euro (EUR) Weakens, Germany Reluctant to Increase Spending

The Euro (EUR) ticked lower yesterday, giving up some of its recent gains amid concerns Germany’s fiscal response to the coronavirus may be limited in scope. Further weighing on the single currency was the publication of the Eurozone’s consumer price index, which revealed inflation slowed from 1.4% to 1.2% in February.

However, the Euro may look to claw back some ground this evening, with economists forecasting the Eurozone’s latest retail sales figures will reveal a bump in sales growth in January.

US Dollar (USD) Stable as G7 Statement Fails to Ease Coronavirus Concerns

The US Dollar (USD) fell back overnight in response to the Federal Reserve’s decision to slash interest rates as an emergency measure to protect against the coronavirus. The cut, coming two weeks before its next official meeting, came as a major shock to markets and saw the ‘Greenback’ relinquish some the gains made after the lukewarm response to G& finance ministers pledge to protect the global economy from the coronavirus.

Meanwhile, the US Dollar may look to rally later tonight, if the ISM non-manufacturing PMI reports that the US service sector continued to expand at a healthy pace last month.

Canadian Dollar (CAD) Slumps ahead of BoC Rate Decision

The Canadian Dollar (CAD) trended lower on Tuesday, with the oil-sensitive ‘Loonie’ failing to secure support in spite of WTI crude prices rallying by over 2% through the session.

Looking ahead, this downtrend in CAD exchange rates may persist overnight if the Bank of Canada (BoE) follows the lead of other central banks in lowering interest rates.

New Zealand Dollar (NZD) Bolstered by Fed Rate Cut

The New Zealand Dollar (NZD) jumped in overnight trade on Tuesday, with the risk sensitive currency strengthening in the wake of the Fed’s shock decision to cut interest rates.

Data Releases

March 4th 10:30 AUD GDP (Q4) 0.3%
March 4th 17:00 EUR German Retail Sales (Jan) 1%
March 4th 19:00 EUR Services PMI (Feb) 52.8
March 4th 19:30 GBP Services PMI (Feb) 53.3
March 4th 20:00 EUR Retail Sales (Jan) 0.6%
March 5th 01:00 CAD BoC Rate Decision 1.5%
March 5th 01:00 USD ISM Non-Manufacturing PMI 54.9

Louisa Heath