Australian Dollar (AUD) Muted as RBA Minutes Prove Dovish
The Australian Dollar (AUD) remained relatively muted in the wake of the release of the Reserve Bank of Australia’s (RBA) most recent set of meeting minutes.
As the tone of the minutes proved dovish in nature, this left AUD exchange rates with little in the way of support yesterday. Comments indicating that the central bank’s current policy settings have helped to hold down the ‘Aussie’ added to the bearish mood, leaving the Australian Dollar on a weaker footing against its rivals.
Even so, a solid rebound in March’s retail sales figure could encourage AUD exchange rates to recover some ground this morning.
Pound (GBP) Falters despite Lower UK Unemployment Rate
The Pound (GBP) failed to hold onto a positive footing during Tuesday’s European session in spite of a better-than-expected unemployment rate, which fell from 5% to 4.9% in February, defying expectations of an uptick.
However, accompanying data revealed that company payrolls were down 56,000 in March, causing concern that the UK job market is still under threat of long-term damage.
However, the mood towards the Pound could improve on the back of March’s inflation rate as long as the figure shows an increase.
Euro (EUR) Supported as German Producer Prices Strengthen
The Euro (EUR) found some support on the back of March’s German producer price index data as both the monthly and yearly figures showed a stronger increase than anticipated, encouraging hopes that inflationary pressure is mounting in the Eurozone’s powerhouse economy.
While stronger signs of inflationary pressure are unlikely to bolster European Central Bank (ECB) confidence significantly, this improvement still shored up EUR exchange rates.
However, growing anticipation ahead of Thursday’s ECB policy announcement may keep the single currency under some pressure as investors may hold aggressive bets.
US Dollar (USD) Bolstered as Safe-Haven Demand Recovers
The US Dollar (USD) rallied as market risk appetite began to ease once again in the face of ongoing Covid-19 pressures.
Signs of growing infections in India and concerns over the spread of regional variants weighed on market sentiment overnight, offering the US Dollar a boost against its risk-sensitive rivals. In spite of an absence of domestic data releases, USD exchange rates pushed higher across the board, capitalising on the latest bout of investor doubt.
With US data releases still thin on the ground, however, the US Dollar may struggle to find additional upside potential in the near term.
Canadian Dollar (CAD) Under Pressure on Oil Worries
The Canadian Dollar (CAD) saw some losses in response to the latest bout of market anxiety over the global oil market.
Doubts that oil prices will see any major recovery in the months ahead, given the ongoing impact of the Covid-19 pandemic, kept the commodity-correlated currency under a degree of pressure last night. Lingering worries over the possibility of global growth continuing to underperform in 2021 added to the weakness of the Canadian Dollar.
Tonight’s Bank of Canada (BoC) policy meeting could push CAD exchange rates lower if policymakers prove less confident than anticipated.
New Zealand Dollar (NZD) Rises Ahead of Inflation Data
The New Zealand Dollar (NZD) managed to strengthen against many of the majors even as market confidence faltered.
Support for the ‘Kiwi’ lingered as expectations for this morning’s inflation data grew, keeping NZD exchange rates from shedding any particular ground. With investors optimistic of an increase in inflationary pressure the potential for New Zealand Dollar losses proved limited.
As long as the inflation rate picks up on the quarter as forecast, the New Zealand Dollar could stay on a positive footing against the other majors.
08:45 NZD Inflation Rate (Q1) 0.7%
11:30 AUD Retail Sales (Mar) 1%
16:00 GBP Inflation Rate (Mar) 0.8%
00:00 CAD Bank of Canada Interest Rate Decision 0.25%