Australian Dollar Rallies as New Home Sales Jump 90%

Australian Dollar (AUD) Supported as Home Sales Surge

The Australian Dollar (AUD) benefitted from an unexpectedly strong 90% surge in March’s HIA new home sales figure at the start of the week.

Coupled with a general improvement in market risk appetite, this offered the Australian Dollar a solid boost against many of the majors at the start of the week.

However, the release of the Reserve Bank of Australia’s (RBA) most recent set of meeting minutes could provoke fresh volatility for AUD exchange rates this morning.

Pound (GBP) Rebounds Sharply on Growing Market Optimism

The Pound (GBP) returned to a positive footing during Monday’s European session in spite of an absence of fresh domestic data.

With market confidence improving once again, the Pound found support against its rivals, recovering some of the ground lost over the course of the last week. A lingering optimism over the strength of the economic outlook, following the recent easing in lockdown conditions, encouraged GBP exchange rates to push higher.

However, demand for the Pound could weaken this evening if February’s UK unemployment rate picks up as anticipated.

Euro (EUR) Mixed as US Dollar Falls

The Euro (EUR) was mixed during yesterday’s European session as weakness in the US Dollar gave the single currency support due to the negative correlation in the pairing.

The Euro came under some pressure as Eurozone construction output saw a sharper decline on the year than forecast.

A softening of the monthly German producer price index this afternoon may keep the euro biased to the downside in the near term.

US Dollar (USD) Pressured by Increased Market Risk Appetite

The US Dollar (USD) fell yesterday as investors adopted a more risk-positive outlook.

In the absence of any fresh safe-haven demand, the US Dollar weakened across the board as a prevailing risk-on trade drove markets. As the Federal Reserve looks set to keep monetary policy on hold for the foreseeable future, investors see no particular reason to favour the US Dollar at this stage.

With fresh domestic data thin on the ground this week the US Dollar may struggle to find any major rallying point if the upbeat mood continues.

Canadian Dollar (CAD) Unable to Benefit from Housing Starts Increase

The Canadian Dollar (CAD) failed to pick up in spite of a sharp increase in March’s housing starts figure.

Although signs point towards the construction sector recovering momentum heading into the second quarter, the appeal of the Canadian Dollar remained limited. As confidence in the prospect of an imminent recovery in global oil demand weakened, this left CAD exchange rates on the back foot, dragged lower by the risk of future oil market softness.

Unless tonight’s ADP crude oil inventories report proves encouraging the Canadian Dollar may continue to trend lower.

New Zealand Dollar (NZD) Bolstered as Services PMI Rebounds

The New Zealand Dollar (NZD) strengthened in the wake of March’s solidly improved services PMI.

As the index jumped from 49.7 to 52.4 on the month, this pointed towards the sector returning to a state of growth at the end of the first quarter, giving investors greater cause for confidence in the economic outlook.

Even so, if market risk appetite starts to fade once again this may limit the potential for any further ‘Kiwi’ gains over the course of the day.

Data Releases

11:30 AUD Reserve Bank of Australia Meeting Minutes
16:00 EUR Germany Producer Price Index (Mar) 0.6%
16:00 GBP Unemployment Rate (Feb) 5.1%

Louisa Heath

louisa.heath@torfx.com


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