Australian Dollar Struggles despite Strong Services PMI

Australian Dollar (AUD) Lacks Appeal even as Services PMI Remains Strong

The Australian Dollar (AUD) stumbled as the finalised services PMI showed a smaller monthly uptick than anticipated, although the service sector demonstrated solid growth in March.

While signs point towards the Australian economy remaining on a stronger footing in the first quarter, AUD exchange rates were left on the back foot, particularly in the face of wider market risk aversion.

In the absence of any fresh Australian economic data releases, the Australian Dollar may struggle to find a rallying point in the near term.

Pound (GBP) Under Pressure in Spite of Positive UK Services PMI

The Pound (GBP) remained on the back foot in spite of confirmation that the UK services PMI had returned to expansion territory in March as the Sterling selloff continued.

As the impact of the services PMI had already been priced into GBP exchange rates in the wake of the initial reading, this limited the potential for fresh Pound gains. Although the relative strength of the service sector bodes well for the outlook of the first quarter growth rate, this was not enough to offer GBP exchange rates support.

However, if the corresponding construction PMI also shows solid growth on the month this could help limit Pound losses this evening.

Euro (EUR) Bolstered as Eurozone Services PMI Betters Expectations

The Euro (EUR) benefitted from a better-than-expected performance in March’s set of finalised Eurozone services PMIs.

Even though the index remained trapped below the neutral baseline of 50, investors took encouragement from the fact that the finalised figures proved stronger than initially estimated. With the sector showing signs of recovering some of its lost momentum heading into the second quarter, the single currency found a boost against its rivals.

Another positive month of growth in February’s Germany factory orders could see the Euro extending its gains further tonight.

US Dollar (USD) Muted as Trade Deficit Widens

The US Dollar (USD) softened during the European session as investors awaited the Federal Open Market Committee (FOMC) minutes and a speech from President Joe Biden on the $2 trillion infrastructure plan.

USD exchange rates also came under pressure from February’s balance of trade figure showing a greater widening of the deficit than anticipated. With export volumes proving smaller than expected, the US Dollar found itself lacking in support against many of its rivals.

However, if initial jobless claims show a smaller increase on the week, this may offer USD exchange rates a boost.

Canadian Dollar (CAD) Softens in Spite of Ivey PMI Surge

The Canadian Dollar (CAD) failed to capitalise on an unexpectedly strong uptick, from 60 to 72.9, in the Ivey PMI in the midst of market risk aversion.

In spite of business confidence showing a sharp increase on the month, CAD exchange rates were left on the back foot thanks to the underwhelming nature of February’s balance of trade.

Anticipation ahead of the release of Friday’s unemployment rate could keep the Canadian Dollar biased to the downside in the days ahead.

New Zealand Dollar (NZD) Slides Ahead of ANZ Business Confidence Index

The New Zealand Dollar (NZD) slipped lower in the face of another day of risk-off trading among investors.

With confidence in the global economic outlook temporarily muted, NZD exchange rates were left exposed to selling pressure yesterday. In the absence of any fresh domestic data releases the New Zealand Dollar found itself lacking in support even as the latest US trade data proved weaker than anticipated.

Another negative monthly reading for the ANZ business confidence index may drag the ‘Kiwi’ down further this morning.

Data Releases

11:00 NZD ANZ Business Confidence Index (Apr)
16:00 EUR Germany Factory Orders (Feb) 1.2%
18:30 GBP Construction PMI (Mar) 54.6
22:30 USD Initial Jobless Claims (03/Apr) 680,000

Louisa Heath