Pound Boosted by Improved Fourth Quarter UK GDP

Australian Dollar (AUD) Unable to Capitalise on Building Permits Increase

The Australian Dollar (AUD) failed to benefit from a sharp rebound in February’s building permits figure.

Although permits saw a 21.6% increase on the month, this was not enough to restore confidence in the health of the construction sector in the wake of January’s sharp decline. As private sector credit growth dipped on the year, the Australian Dollar lacked positive momentum against its rivals.

A narrowing of February’s trade surplus could see the ‘Aussie’ shedding fresh ground against its rivals.

Pound (GBP) Shored Up as UK GDP Revised Higher

The Pound (GBP) found support as the finalised fourth quarter UK GDP saw an unexpected upward revision.

With the quarterly growth rate revised up from 1% to 1.3%, confidence in the outlook of the economy improved, offering the Pound a leg up against its rivals.

As long as the finalised March manufacturing PMI confirms that the sector experienced strong growth at the end of the first quarter, this should keep the Pound trending higher.

Euro (EUR) Muted as Eurozone Inflation Data Proves Mixed

The Euro (EUR) softened even as the headline Eurozone inflation rate rose in line with forecasts, from 0.9% to 1.3% on the year in March.

Investors were instead discouraged to find that the core inflation rate had unexpectedly dipped on the year, suggesting that inflationary pressure is not as strong as hoped.

However, with forecasts pointing towards a solid rebound in the monthly German retail sales data, the mood towards the Euro could see some improvement this evening.

US Dollar (USD) Struggles despite ADP Employment Change Improvement

The US Dollar (USD) came under pressure last night even as the latest ADP employment change figure showed a strong increase.

While signs point towards an increasing degree of strength within the US labour market this was not enough to prevent USD exchange rates shedding ground. As the rise was not quite as sharp as estimated, this limited the impact of the data, even though confidence in the underlying performance of the US economy remains high.

As the ISM manufacturing PMI looks set to deliver another solid month of growth, though, the US Dollar could find a rallying point tonight.

Canadian Dollar (CAD) Bolstered by Sharp GDP Uptick

The Canadian Dollar (CAD) strengthened as January’s GDP reading showed a sharper uptick than anticipated.

As the growth rate picked up from 0.1% to 0.7% at the start of the year this gave CAD exchange rates a solid boost, with worries easing over the economic outlook. A stronger January performance boosts the odds of the Canadian economy delivering a positive quarterly growth rate, giving investors less incentive to sell out of the Canadian Dollar.

If March’s manufacturing PMI also delivers a strong performance, this could see CAD exchange rates extending their gains across the board.

New Zealand Dollar (NZD) Slides as Business Confidence Turns Negative

The New Zealand Dollar (NZD) slipped lower across the board in response to a weaker-than-expected ANZ business confidence index.

Even though investors had anticipated a sharp drop in the index, from 7 to 0, they were caught off guard as it dipped into negative territory. This decline suggests that the New Zealand economy faces greater pressure in 2021, with the global impact of the Covid-19 crisis continuing to weigh on the outlook.

With the Roy Morgan consumer confidence index also expected to show a decline in March, the mood towards the New Zealand Dollar may remain bearish today.

Data Releases

08:00 NZD ANZ Roy Morgan Consumer Confidence Index (Mar) 109.5
11:30 AUD Balance of Trade (Feb) A$9.7 billion
17:00 EUR Germany Retail Sales (Feb) 2%
19:30 GBP Manufacturing PMI (Mar F) 57.9
00:30 CAD Manufacturing PMI (Mar) 55
01:00 USD ISM Manufacturing PMI (Mar) 61.3

Louisa Heath

louisa.heath@torfx.com


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