US Dollar Lacks Traction Ahead of Non-Farm Payrolls Report

Australian Dollar (AUD) Dragged Lower as Trade Surplus Narrows

The Australian Dollar (AUD) faltered during Thursday’s European session as February’s trade surplus narrowed further than forecast from A$9.616 billion to A$7.529 billion

As monthly export volumes showed negative growth, AUD exchange rates came under pressure, even though February’s retail sales data saw an upward revision.

Looking ahead to next week, the Australian Dollar will likely be sensitive to shifts in market risk appetite ahead of the Reserve Bank of Australia’s (RBA) interest rate decision.

Pound (GBP) Strengthens on Manufacturing PMI Revision

The Pound (GBP) received support from an upwardly revised UK manufacturing PMI reading ahead of the Easter weekend.

With the finalised PMI clocking in at 58.9, hitting a ten-year high, the Pound firmed as economic recovery optimism increased.

As long as the UK appears to remain on track to continue its exit from lockdown conditions, the Pound could extend its gains.

Euro (EUR) Steady despite German Retail Sales Miss

The Euro’s (EUR) gains were limited during Thursday’s European session as the latest German retail sales data fell short of forecast.

As forecasts had pointed towards sales rebounding 2% on the month in February, this led to some disappointment as the data only showed a 1.2% uptick.

However, the single currency made some gains as the Eurozone’s manufacturing PMI revealed record growth in the sector during March, the highest level since the surveys started 24 years ago.

Looking ahead, the Euro will likely be driven by coronavirus developments as new national restrictions threaten economic activity in the bloc, concerning EUR investors.

US Dollar (USD) Appeal Limited even as Manufacturing Sector Grows

The US Dollar (USD) saw limited demand despite the ISM manufacturing PMI surging to a fresh high overnight.

While the PMI jumped to 64.7 in March, hitting its highest level since December 1983, this was not enough to give USD exchange rates any particular boost. Even as the manufacturing sector continues to push ahead worries over the wider US economic outlook remain, especially in the face of deteriorating global trade conditions.

Nevertheless, the US Dollar could find a strong rallying point as long as the non-farm payrolls report shows a strong increase in employment on the month.

Canadian Dollar (CAD) Slides in Spite of Manufacturing PMI Strength

The Canadian Dollar (CAD) failed to strengthen in spite of a better-than-expected performance from March’s manufacturing PMI.

Although the PMI rose from 54.8 to 58.5 last month, signalling a solid increase in manufacturing sector activity, demand for the Canadian Dollar remained distinctly limited last night. Even with the Canadian economy demonstrating fresh signs of strength CAD exchange rates slipped lower across the board, weighed down by the general sense of market risk aversion.

Any decline in the global oil price could add to the weakness of the commodity-correlated Canadian Dollar in the days ahead.

New Zealand Dollar (NZD) Rises on Smaller Consumer Confidence Dip

The New Zealand Dollar (NZD) picked up thanks to a smaller-than-expected dip in the ANZ Roy Morgan consumer confidence index.

As the index only fell from 113.1 to 111 in March, rather than hitting 109.5 as anticipated, this helped to temporarily limit anxiety over the outlook of the New Zealand economy. With confidence showing greater signs of resilience, in spite of deteriorating business sentiment, the appeal of the ‘Kiwi’ picked up once again.

However, the New Zealand Dollar remains vulnerable to any further deterioration in the wider sense of market sentiment.

Data Releases

17:45 EUR France Budget Balance (Feb) €-38 billion
23:30 USD Non-Farm Payrolls (Mar) 647,000

Tom Hosking