Australian Dollar (AUD) Weakens on Covid-19 Infection Worries
The Australian Dollar (AUD) remained on a weaker footing against its rivals at the start of the week.
In the absence of any fresh domestic data releases, investors found little reason to favour the ‘Aussie’ yesterday, especially as market risk appetite weakened. Concerns over the possibility of a winter surge in Covid-19 infections cast further doubt over the outlook of the Australian economy, with vaccine distribution still lagging significantly.
Even so, the ‘Aussie’ could find some support this morning if the NAB business confidence index shows an uptick on the month.
Pound (GBP) Rallies as UK Lockdown Eases
The Pound (GBP) rallied as non-essential UK retail shops, pubs and restaurants reopened their doors after months of closure.
A major surge in retail footfall prompted by the easing in national lockdown conditions encouraged the Pound to trend higher across the board during Monday’s European session. With higher retail sector activity likely to bolster the GDP reading in the second quarter, GBP exchange rates found plenty of room to climb.
If February’s GDP report can deliver a positive monthly growth rate, the Pound could gain additional support this evening.
Euro (EUR) Supported by Eurozone Retail Sales Rebound
The Euro (EUR) saw some support on the back of a solid rebound in the Eurozone’s February retail sales data.
As sales rose 3% on the month, doubling the forecast uptick, this offered investors some degree of confidence in the underlying health of the Eurozone economy. With retail activity recovering in spite of the rising incidence of Covid-19 infections across the currency union, the mood towards the Euro saw some improvement.
Another uptick in the German ZEW economic sentiment index may add to the positive mood for EUR exchange rates later.
US Dollar (USD) Softens Ahead of Inflation Rate Data
The US Dollar (USD) started the week on a generally softer footing as optimism over Friday’s producer price index data faded.
While inflationary pressure within the world’s largest economy has shown signs of surging higher, this was not enough to keep USD exchange rates from shedding some of their ground at the start of the new week. With the general sense of safe-haven demand appearing limited, the US Dollar was left to trend lower against many of the majors.
However, if March’s headline US inflation rate also shows a solid increase, the US Dollar could receive a fresh boost tonight.
Canadian Dollar (CAD) Unable to Benefit from Business Outlook Uptick
The Canadian Dollar (CAD) failed to capitalise on the solid improvement of the first quarter business outlook survey.
Although the index picked up from 1.3 to 2.9 in the first three months of 2021, this was not enough to give the Canadian Dollar any real boost against its rivals last night. Lingering doubts over the strength of the global economic outlook kept CAD exchange rates under a degree of pressure during the course of Monday’s European session.
Without the support of any new Canadian economic data, the Canadian Dollar may well remain on the back foot in the near term.
New Zealand Dollar (NZD) Makes Limited Gains
The New Zealand Dollar (NZD) found some traction against a few of its rivals yesterday, in spite of a lack of domestic data.
Even though doubts over the strength of the New Zealand economic outlook remain, this was not enough to keep the ‘Kiwi’ from gaining ground. The relative weakness of the US Dollar also helped to shore up NZD exchange rates for the time being.
However, with the first quarter NZIER business confidence index looking set to slide deeper into negative territory, support for the New Zealand Dollar appears likely to weaken.
Data Releases
08:00 NZD NZIER Business Confidence Index (Q1) -16
11:30 AUD NAB Business Confidence Index (Mar) 18
16:00 GBP Gross Domestic Product (Feb) 0.6%
19:00 EUR Germany ZEW Economic Sentiment Index (Apr) 79
22:30 USD Inflation Rate (Mar) 2.5%