Australian Dollar (AUD) Gains despite Gloomy Consumer Outlook
The Australian Dollar (AUD) edged higher on Wednesday, with the currency benefiting from broad weakness in the US Dollar (USD). However, these gains were tempered somewhat in light of Westpac’s consumer confidence index, as it revealed household sentiment tumbled to a four-year low this month.
Looking ahead, the Australian Dollar may struggle to consolidate its gains during today’s session as a continued focus on the global coronavirus crisis limits the appeal of the risk-sensitive ‘Aussie’.
Pound (GBP) Lifted by Stimulus Hopes
The Pound (GBP) ticked higher mid-week as markets welcomed the efforts by the Bank of England (BoE) and Treasury to shore up the UK against the economic impact of the coronavirus. This involved the two working in tandem to deliver their response, with the BoE cutting interest rates back to record lows and the UK’s Budget containing a pledge of £30bn in stimulus to help support the UK economy.
GBP investors were cheered by the response on hopes it will help UK businesses survive the short-term shock posed by the coronavirus.
Euro (EUR) Muted Ahead of ECB Rate Decision
The Euro (EUR) was mostly rangebound through yesterday’s trading session, with the single currency struggling after European Central Bank President Christine Lagarde warned of the potential impact of the coronavirus on the Eurozone economy. In a stark warning to EU leaders Lagarde said the impact could be comparative to that of the 2008 crash unless governments are willing to provide more fiscal support.
The ECB will deliver its latest rate decision later tonight. While economists are forecasting another round of monetary stimulus from the bank, any moves are likely to prove highly limited given interest rates are already at zero.
US Dollar (USD) Slips on Stimulus Doubts
The US Dollar (USD) trended lower overnight, reversing some of Tuesday’s gains as observers began to express their doubts over Trump’s ability to pass the ‘big’ tax cuts he had promised in response to the coronavirus. The ‘Greenback’s losses came in spite of the US consumer price index revealing core inflation shot up to 2.4% in February.
Looking ahead, USD investors will remain focused on the US government’s response to the coronavirus crisis, with the US Dollar remaining on the defensive so long as it looks unlikely Trump will secure his plans for a payroll tax cut.
Canadian Dollar (CAD) Dented by Sliding Oil Prices
The Canadian Dollar (CAD) stumbled on Wednesday as crude prices fell around 4% amid Saudi Arabia’s ongoing price war with Russia.
New Zealand Dollar (NZD) Benefits from Increased Spending
The New Zealand Dollar (NZD) rallied during yesterday’s session, rising on the back of data showing domestic credit and debit card spending was surprising robust through February.
March 12th 20:00 EUR Industrial Production (Jan) 1.4%
March 12th 22:45 EUR ECB Rate Decision 0%