Australian Dollar (AUD) Stumbles on Rising Chinese Unemployment
The Australian Dollar (AUD) faltered as the Chinese unemployment rate unexpectedly picked up at the start of 2021.
This latest sign of economic strain within the world’s second-largest economy limited the appeal of the risk-sensitive Australian Dollar, particularly as it commonly functions as a market proxy for sentiment towards China. Meanwhile, February’s HIA new home sales data saw a sharp rebound on the month, although this was not enough to shore up the ‘Aussie’.
The release of the Reserve Bank of Australia’s (RBA) meeting minutes could see AUD exchange rates come under further pressure this morning.
Pound (GBP) Slips even as UK Economic Optimism Recovers
The Pound (GBP) failed to benefit from news that UK economic optimism had delivered a record jump on the month.
While the Ipsos MORI survey reported that its economic optimism index had jumped from -31 to 2 in February, GBP exchange rates failed to receive particular encouragement. Comments from Bank of England (BoE) Governor Andrew Bailey equally failed to give the Pound much encouragement, given that he offered a fresh warning over the prospect of an unequal recovery from the pandemic.
Without the support of fresh economic data, the Pound looks set to remain on the back foot over the course of the day.
Euro (EUR) Muted in Spite of German Wholesale Prices Growth
The Euro (EUR) found itself lacking traction even as German wholesale prices delivered a solid uptick on the year.
Even though signs continue to point towards a greater level of resilience within the Eurozone’s powerhouse economy, the mood towards the single currency proved negative. The latest surge in demand for the US Dollar left the Euro on the back foot, thanks to the negative correlation that exists between the pair.
However, EUR exchange rates could find a rallying point this evening if March’s Germany ZEW economic sentiment index picks up on the month as anticipated.
US Dollar (USD) Strengthens as Manufacturing Index Betters Forecast
The US Dollar (USD) remained on a stronger footing against its rivals at the start of the week thanks to a solid New York Empire State manufacturing index.
Although forecasts had pointed towards a solid uptick in the index, markets were caught off guard by the strength of the improvement on the month, with the index jumping from 12.1 to 17.4. This suggests that the world’s largest economy continued to shrug off the impact of the Covid-19 pandemic this month, giving investors fresh incentive to favour the US Dollar.
The appeal of the US Dollar could weaken overnight, however, with forecasts pointing towards a monthly contraction in retail sales growth.
Canadian Dollar (CAD) Capitalises on Manufacturing Sales Growth
The Canadian Dollar (CAD) pushed higher against many of the majors as January’s manufacturing sales figure bettered expectations.
As sales surged 3.1% on the month, this offered investors greater cause for confidence in the health of the Canadian economy, in spite of ongoing global pressures. Coupled with improved producer price index readings, this left CAD exchange rates on an uptrend, even as the general sense of market risk appetite proved limited.
Even so, the Canadian Dollar may struggle to hold onto its gains for long as focus shifts back towards wider market developments.
New Zealand Dollar (NZD) Lifted by Improved Services PMI
The New Zealand Dollar (NZD) gained some ground as February’s services PMI moved closer to the neutral baseline of 50.
Although the sector was unable to return to a state of expansion last month, with the PMI only rising from 48 to 49.1, this improvement still offered the ‘Kiwi’ a boost against its rivals. Hopes that the New Zealand economy could recover some of its lost momentum before the end of the first quarter helped to shore up NZD exchange rates further.
Another underwhelming month of credit card spending could limit the potential for further New Zealand Dollar gains, however.
Data Releases
11:30 AUD Reserve Bank of Australia Meeting Minutes
13:00 NZD Credit Card Spending (Jan)
21:00 EUR Germany ZEW Economic Sentiment Index (Mar) 74
23:30 USD Retail Sales (Feb) -0.5%