Australian Dollar (AUD) Fails to Benefit from Stronger Private Capital Expenditure
The Australian Dollar (AUD) struggled to capitalise on a sharp rebound in the fourth quarter private capital expenditure as the figure bettered forecasts with a 3% rebound.
While higher levels of capital expenditure suggest a greater degree of business confidence and investment, the ‘Aussie’ remained on the back foot thanks to the limited nature of market risk sentiment.
However, if private sector credit also shows signs of picking up on the month in January, this could help to shore up AUD exchange rates ahead of the weekend.
Pound (GBP) Appeal Fades in Absence of UK Data Releases
The Pound (GBP) failed to maintain its earlier sense of bullishness in the absence of any fresh economic data developments.
As markets have now largely priced in hopes of a potential second quarter economic recovery, the room for further Pound gains diminished. With earlier optimism over the UK’s successful rollout of Covid-19 vaccines also fading, there was little to keep GBP exchange rates from ceding ground.
Comments from Bank of England chief economist Andy Haldane could drive some movement in GBP exchange rates. Haldane has previously spoken of the UK economy being a ‘coiled spring’, so any optimism in his assessment of the UK economy could support Sterling.
Euro (EUR) Trends Higher on Rising German Consumer and Eurozone Business Confidence
The Euro (EUR) pushed higher overnight as German consumer confidence and Eurozone business confidence indexes bettered forecast.
As German consumer confidence picked up for March, with the index rising from -15.5 to -12.9, this encouraged hopes that the Eurozone’s powerhouse economy is starting to shake off the impact of the ongoing pandemic. The improvement in the overall Eurozone business confidence index added to the appeal of the single currency, even as the service sector showed fresh signs of weakness.
With forecasts pointing towards a negative reading from February’s French inflation rate, though, the Euro could fall out of favour this evening.
US Dollar (USD) Gains Limited in spite of Durable Goods Orders Surge
The US Dollar (USD) found limited traction on the back of a better-than-expected surge in durable goods orders.
As orders jumped 3.4% on the month in January, accompanying an upward revision of December’s figure, investors found renewed cause for confidence in the outlook of the world’s largest economy.
However, while initial jobless claims saw a smaller increase on the week than anticipated, this was not enough to diminish lingering concerns over the weakness of the labour market, with more than 19 million now unemployed.
A widening of the advance goods trade deficit could see USD exchange rates put on a downtrend once again.
Canadian Dollar (CAD) Benefits from Resilient Average Weekly Earnings
The Canadian Dollar (CAD) held onto a largely positive footing thanks to the resilient nature of December’s average weekly earnings data.
As growth in earnings clocked in at 6.4%, only slightly down on the previous year, this gave the Canadian Dollar a boost against its rivals. Sustained levels of wage growth may help to insulate the Canadian economy from the impact of ongoing Covid-19 anxiety, helping to shore up CAD exchange rates in the short term.
Stronger producer price index figures for January may encourage the Canadian Dollar to push higher across the board tonight.
New Zealand Dollar (NZD) Softened by Surprise Business Confidence Index Decline
The New Zealand Dollar (NZD) stumbled in the wake of a surprise decline in the finalised ANZ business confidence index for February.
While the index was expected to show a solid improvement on the month, rising from 9.4 to 11.8, the figure instead slipped to 7. This suggests that optimism among New Zealand businesses faltered over the course of the last month, undermining hopes of sustained strength within the domestic economy.
If the New Zealand trade balance falls into a state of deficit this morning the mood towards the ‘Kiwi’ may well sour further.
Data Releases
08:45 NZD Balance of Trade (Jan) NZ$-800 million
11:30 AUD Private Sector Credit (Jan) 0.4%
18:00 GBP Nationwide Housing Prices (Feb) 0.2%
18:45 EUR France Inflation Rate (Feb) -0.3%
00:30 CAD Producer Price Index (Jan) 1.9%
00:30 USD Advance Goods Trade Balance (Jan) -$83 billion