US Dollar Buoyed as Consumer Confidence Index Leaps

Australian Dollar (AUD) Lacks Traction Ahead of Building Permits Data

The Australian Dollar (AUD) support proved limited as market risk appetite continued to diminish.

As doubts over the strength of the global economic outlook lingered, this kept the ‘Aussie’ from trending higher against its rivals. Demand for the risk-sensitive currency remained lacking in the absence of any fresh Australian data releases, with wider market sentiment instead dominating its direction.

If February’s building permits figure bounces back as anticipated, AUD exchange rates may find some degree of renewed traction.

Pound (GBP) on the Back Foot as UK Steel Industry Comes Under Pressure

The Pound (GBP) fell largely out of favour with investors in the absence of notable data releases yesterday, although news of increasing pressure coming to bear on the UK steel industry raised some concerns over the UK’s economy.

With the collapse of one of the key backers of Liberty Steel, doubts over the outlook of the domestic steel industry picked up sharply. The risk of greater disruption within the UK manufacturing sector limited the appeal of the Pound, even as the country began its process of exiting the current national lockdown.

Any negative revisions to the fourth quarter UK GDP report may leave the Pound under pressure today.

Euro (EUR) Gains Limited as German Inflation Data Proves Mixed

The Euro (EUR) saw some modest gains in the wake of March’s mixed German inflation data.

While the headline inflation rate picked up from 1.3% to 1.7%, moving closer to the European Central Bank’s (ECB) 2% target, this was not enough to prompt any sharp Euro rally. As the monthly inflation rate instead weakened the appeal of the single currency remained limited, with investors seeing the risk of inflationary pressure failing to pick up further in the months ahead.

A steady German unemployment rate could offer further support to EUR exchange rates this evening, limiting anxiety over the ongoing impact of Covid-19.

US Dollar (USD) Rallies on Leap in Consumer Confidence

The US Dollar (USD) rallied thanks to a sharp uptick in the latest CB consumer confidence index and weaker market risk appetite.

Demand for the US Dollar picked up as the index surged from 90.4 to 109.7 on the month, pointing towards a dramatic improvement in domestic sentiment. Signs of resilience within the US housing market also helped to push USD exchange rates higher across the board as the odds of a weaker first quarter growth performance diminished.

As forecasts point towards a sharp increase in the ADP employment change figure for March, the US Dollar could extend its bullish trend, benefitting from evidence of a recovering labour market.

Canadian Dollar (CAD) Under Pressure in Spite of Strong Earnings Growth

The Canadian Dollar (CAD) remained on a weaker footing even as January’s average weekly earnings figure showed a solid improvement.

Although earnings saw growth of 8.3% on the year in January, this failed to give CAD exchange rates any particular degree of support. With the Suez Canal blockage cleared, the global oil market proved bearish, especially with ongoing pandemic-based disruption looking set to keep oil demand under pressure in the months ahead.

However, the Canadian Dollar may recover some of its lost ground this evening as January’s GDP looks set to pick up on the month.

New Zealand Dollar (NZD) Slumps as Building Permits Plunge

The New Zealand Dollar (NZD) slumped in response to an unexpectedly major decline in February’s building permits figure.

Even though investors had expected to see permits fall sharply on the month, the extent of the actual -18.2% drop caught markets off guard. With the construction sector showing signs of a sharp slowdown, worries over the health of the wider economy left the ‘Kiwi’ on the back foot against its rivals.

Confirmation that the ANZ business confidence index dropped to 0 in March may see the New Zealand Dollar adding to its losses this morning.

Data Releases

11:00 NZD ANZ Business Confidence Index (Mar F) 0
11:30 AUD Building Permits (Feb) 5%
17:00 GBP Gross Domestic Product (Q4 F) 1%
18:55 EUR Germany Unemployment Rate (Mar) 6%
23:15 USD ADP Employment Change (Mar) 550,000
23:30 CAD Gross Domestic Product (Jan) 0.5%

Louisa Heath