Australian Dollar (AUD) Mixed in spite of Stronger Wage Price Index
The Australian Dollar (AUD) saw a mixed performance in spite of a stronger-than-expected performance from the fourth quarter wage price index, increasing 0.6% on the quarter, and higher than the 0.3% forecast.
AUD exchange rates remained under pressure thanks to the underwhelming nature of the fourth quarter construction work done reading, which showed a surprise contraction and undermined confidence in the health of the wider economy.
If private capital expenditure shows signs of recovery, however, this may help to improve the appeal of the Australian Dollar this morning.
Pound (GBP) Bullishness Fades in Absence of Fresh UK Data
The Pound (GBP) lost much of its recent bullishness last night as the impact of the UK government’s lockdown exit plan announcement diminished.
Although markets remain optimistic that the UK economy could stage a recovery in the second quarter, with non-essential retail shops set to reopen in April, the Pound faltered. As GBP exchange rates have experienced a strong run of gains in recent days, this left room for a correction, leading investors to sell out of the Pound.
Without the release of any fresh UK economic data today, the mood towards the Pound could easily remain muted at best.
Euro (EUR) Finds Support on Upwardly Revised German GDP
The Euro (EUR) found some support overnight thanks to an upward revision to the finalised fourth quarter German GDP data.
With the quarterly growth rate revised up from 0.1% to 0.3%, worries over the health of the Eurozone’s powerhouse economy diminished once again. While this stronger showing is unlikely to keep the currency union from experiencing an imminent double-dip recession the improvement still helped to put a floor under EUR exchange rates.
Any recovery in the latest Germany GfK consumer confidence index may give the single currency further upside momentum this evening.
US Dollar (USD) Strengthens on Rising Treasury Yields
The US Dollar (USD) held onto a steady footing as US Treasury yields began ticking higher towards year highs again.
The US Dollar also received some support as January’s new home sales jumped 4.3% on the month, extending their strong run of growth.
Further gains could be in store for USD exchange rates tonight as forecasts point towards a solid increase in January’s durable goods orders.
Canadian Dollar (CAD) Rises despite US Crude Oil Inventories Increase
The Canadian Dollar (CAD) made gains against some of its rivals even as US crude oil inventories showed a surprise increase.
This latest build-up in US stockpiles failed to put the commodity-correlated Canadian Dollar under any significant pressure overnight, with investors instead focusing on other developments in the oil market. Rising Canadian oil exports to the US offered particular encouragement to CAD exchange rates, with stronger trade likely to support economic growth.
Another solid increase in December’s average weekly earnings figure could help to shore up CAD exchange rates.
New Zealand Dollar (NZD) Bolstered by RBNZ Optimism
The New Zealand Dollar (NZD) strengthened in the wake of the Reserve Bank of New Zealand’s (RBNZ) policy announcement.
While the decision to leave interest rates on hold came as no surprise to investors, the less dovish tone of the central bank’s announcement helped to shore up the ‘Kiwi’ against its rivals. Even though the RBNZ is unlikely to raise interest rates in the near future, the relatively optimistic tone taken on the economic outlook gave NZD exchange rates a solid boost.
As long as the finalised ANZ business confidence index for February confirms an uptick on the month, the New Zealand Dollar looks set to remain on a stronger footing.
Data Releases
11:00 NZD ANZ Business Confidence Index (Feb F) 11.8
11:30 AUD Private Capital Expenditure (Q4) 0%
18:00 EUR Germany GfK Consumer Confidence Index (Mar) -14.3
00:30 CAD Average Weekly Earnings (Dec)
00:30 USD Durable Goods Orders (Jan) 1.1%