Australian Dollar (AUD) Slips on Underwhelming Business Confidence Index
The Australian Dollar (AUD) softened in response to a disappointing showing from the NAB business confidence index.
While the February index saw an upward revision to 18, this was followed by a dip to 16 in March, indicating that sentiment has moved in the wrong direction. This naturally weighed down the Australian Dollar, especially in the wake of unexpectedly weak Chinese trade figures release on Tuesday.
On the other hand, if the Westpac consumer confidence index shows an improvement for April this could offer the ‘Aussie’ a boost this morning.
Pound (GBP) Gives Up Gains as BoE Haldane to Step Down
The Pound (GBP) made gains early in Tuesday’s European session after the UK GDP growth reading for February came in at 0.4%, a return to positive territory after January’s contraction.
However, the Pound came under pressure as news broke that the Bank of England’s (BoE) Chief Economist Andy Haldane will leave his post in June, which weighed on Sterling sentiment.
In the absence of notable data releases during Wednesday’s European session, GBP movement will likely continue being driven by the BoE news as well as optimism over the UK economy reopening and news that England has now started using the Moderna vaccine.
Euro (EUR) Pushes Higher in Defiance of Lower Economic Sentiment Index
The Euro (EUR) held onto a largely positive footing overnight in spite of a surprise decline in the German ZEW economic sentiment index.
While the index slumped from 76.6 to 70.7 for April, suggesting that confidence within the Eurozone’s powerhouse economy is weakening, this was not enough to drag the single currency lower against its rivals at this stage. As the general sense of market risk appetite proved limited this helped to improve the appeal of the less risk-sensitive Euro for the time being.
A sharp monthly decline in February’s Eurozone industrial production data may leave the Euro vulnerable to selling pressure, though.
US Dollar (USD) Mixed in Spite of Inflation Rate Leap
The US Dollar (USD) saw a mixed performance against the majors last night even as the headline inflation rate surged.
Even as the March inflation rate jumped to 2.6% on the year, this failed to offer USD exchange rates a significant rallying point. The potential for major US Dollar gains proved limited even as market sentiment turned more bearish in nature, with investors still seeing little chance of the Federal Reserve making any monetary policy moves in the months ahead.
Fresh commentary from Fed policymakers could put additional pressure on the US Dollar tonight, with USD exchange rates seeing little upside potential at this stage.
Canadian Dollar (CAD) Fails to Benefit from Oil Market Positivity
The Canadian Dollar (CAD) was unable to benefit from another day of positive movement on the global oil market.
While oil prices made fresh gains in response to news that US oil production remains significantly below its pre-pandemic levels the Canadian Dollar remained biased to the downside. With confidence in the global economy weakening CAD exchange rates were left on the back foot as investors piled into less risk-sensitive assets instead.
Even so, if oil prices remain on a positive trend this may still help to limit any potential Canadian Dollar losses over the course of the day.
New Zealand Dollar (NZD) Sees Limited Impact from Business Confidence Decline
The New Zealand Dollar (NZD) limited its weakness as the first quarter NZIER business confidence index delivered a smaller deterioration than anticipated.
As confidence only dropped to -13%, rather than the forecast -16%, this helped to keep something of a floor under NZD exchange rates yesterday. With retail card spending figures also showing fresh growth the ‘Kiwi’ was able to shake off some of the malaise that weighed on other risk-sensitive currencies.
However, reaction to the Reserve Bank of New Zealand’s (RBNZ) April policy meeting has the potential to drive a fresh bout of New Zealand Dollar volatility.
Data Releases
10:30 AUD Westpac Consumer Confidence Index (Apr) 113
12:00 NZD Reserve Bank of New Zealand Interest Rate Decision 0.25%
18:30 GBP Labour Productivity (Q4 F) -4.5%
19:00 EUR Eurozone Industrial Production (Feb) -1.1%