Australian Dollar (AUD) Demand Limited as Risk Appetite Fades
The Australian Dollar (AUD) failed to benefit from confirmation that building permits saw a sharp rebound in February.
The impact of the construction sector data proved limited as a general deterioration in market risk appetite left the ‘Aussie’ on the back foot. Although signs point towards a recovery within the sector this was not enough to overshadow anxiety over the strength of the wider Australian economy.
Anticipation ahead of tomorrow’s release of the NAB business confidence index may help to limit the downside potential of AUD exchange rates.
Pound (GBP) Strengthens as Market Sentiment Sours
The Pound (GBP) recovered some of its lost ground ahead of the weekend as cautious trade in markets and a stronger US Dollar allowed Sterling stabilise.
Some the UK’s vaccine doubts over the AstraZeneca jab eased as the Moderna vaccine rollout continued and a UK government minister Grant Shapps suggested Brits could start thinking about foreign travel.
With the UK progressing to the next stage of its lockdown exit roadmap, the mood towards the Pound could remain elevated over the course of the day.
Euro (EUR) Muted Thanks to German Industrial Production Decline
The Euro (EUR) found limited support as February’s German trade and industrial production figures disappointed.
While the trade surplus widened in February, the extent of the improvement was not as significant as investors had anticipated, leaving the single currency on a weaker footing. The mood towards the Euro also soured in response to news that German industrial production had experienced another month of contraction, defying expectations of a rebound.
Even so, if Eurozone retail sales can show a positive improvement on the month, this could help to limit the potential for EUR exchange rate losses.
US Dollar (USD) Recovers Ground on Cautious Market Trade
The US Dollar (USD) returned to a positive footing against its rivals on safe-haven demand as market sentiment soured following the Fed-driven risk-on trade the previous session.
Sharp improvements in March’s producer price indexes also benefitted the US Dollar, with signs pointing towards a surge in domestic inflationary pressure.
However, with the monthly budget balance looking set to demonstrate another widened deficit the US Dollar may struggle to hold onto its positive footing.
Canadian Dollar (CAD) Bolstered by Unemployment Rate Dip
The Canadian Dollar (CAD) strengthened ahead of the weekend thanks to an unexpected drop in the headline unemployment rate.
As unemployment fell from 8.2% to 7.5% in March, the labour market appears to have recovered much of its lost steam, encouraging hopes of a wider economic improvement. Although some of this surge was the result of a lower participation rate, signalling Canadians leaving the labour market rather than finding employment, this was not enough to dent CAD exchange rates.
An uptick in the first quarter business outlook survey indicator could help to push the Canadian Dollar higher against its rivals tonight.
New Zealand Dollar (NZD) Slides in Absence of Domestic Data
The New Zealand Dollar (NZD) stumbled as demand for higher-yielding currencies diminished in the absence of fresh economic optimism.
Without the support of any domestic data releases, the ‘Kiwi’ was left on the back foot against many of the majors, lacking any reason to strengthen. As the appeal of the US Dollar improved once again, this added to the weakness of NZD exchange rates.
However, growing expectations ahead of this week’s Reserve Bank of New Zealand (RBNZ) interest rate decision could offer the New Zealand Dollar some support.
Data Releases
19:00 EUR Eurozone Retail Sales (Feb) 1%
00:30 CAD Business Outlook Survey Indicator (Q1) 2.9
04:00 USD Monthly Budget Statement (Mar) $-315 billion