New Zealand Dollar Bolstered by Unemployment Rate Drop

Australian Dollar (AUD) Strengthens on Improved Services PMI

The Australian Dollar (AUD) benefitted from an upward revision of April’s finalised services PMI.

As the final reading picked up to 58.8, this signalled a strong month of growth for the service sector, encouraging hopes of the Australian economy having started the second quarter on a stronger footing. The ‘Aussie’ also found support on the back of a stronger-than-expected month of building permits growth.

Fresh comments from Reserve Bank of Australia (RBA) deputy governor Guy Debelle may dampen the Australian Dollar today.

Pound (GBP) Steady ahead of BoE and Elections

The Pound (GBP) was limited during Wednesday’s European session ahead of the Bank of England (BoE) rate decision and local and Scottish elections.

GBP investors held making any aggressive bets as political uncertainty lingers over scrutiny into Prime Minister Boris Johnson’s finances and the possibility of an SNP majority in the Scottish parliament which could renew calls for Scottish independence.

In addition, Sterling looks set to remain on a softer footing in anticipation of tonight’s Bank of England (BoE) policy announcement.

Euro (EUR) Slips as German Service Sector PMI Contracts

The Euro (EUR) slipped lower across the board despite the Eurozone services PMI coming in slightly higher than expected and confirming the sector returned to growth territory in April.

However, investors instead focused on the German service PMI figure which showed a slight downward revision from its initial reading.

A solid month of German factory orders growth could offer the single currency a rallying point this evening.

US Dollar (USD) Stumbles as ADP Employment Change Misses Forecast

The US Dollar (USD) lost some of its positive momentum thanks to a smaller-than-expected increase seen in the latest ADP employment change figure.

While employment showed a solid increase of 742,000 on the month, this fell short of the forecast 800,000 rise, limiting the positive impact of the figure. This miss raised doubts over the relative strength of the upcoming non-farm payrolls report, limiting the appeal of the US Dollar and keeping it from making any significant gains overnight.

If the latest initial jobless claims figure also fails to impress this could add to the weakness of USD exchange rates.

Canadian Dollar (CAD) Muted in Absence of Domestic Data

The Canadian Dollar (CAD) saw limited direction in the absence of any fresh domestic data releases yesterday.

Without the support of any new economic data the upside potential of CAD exchange rates proved limited. Although oil prices saw some modest gains over the course of the European session this failed to offer the Canadian Dollar any real boost against any of the majors.

The Canadian Dollar may struggle to find any rallying point ahead of Friday’s release of Canadian labour market data as investors hold aggressive bets.

New Zealand Dollar (NZD) Rallies on Surprise Unemployment Rate Dip

The New Zealand Dollar (NZD) pushed higher across the board thanks to a surprise dip in the first quarter unemployment rate.

Even though forecasts had pointed towards the unemployment rate holding steady at 4.9% the rate fell to 4.7% in the first three months of the year. With the corresponding participation rate also picking up this points towards a significant improvement for the health of the labour market, encouraging the ‘Kiwi’ to strengthen.

A positive reading from May’s ANZ business confidence index could offer NZD exchange rates an additional boost.

Data Releases

11:00 NZD ANZ Business Confidence (May) 3
16:00 EUR Germany Factory Orders (Mar) 1.7%
21:00 GBP Bank of England Interest Rate Decision 0.1%
22:30 USD Initial Jobless Claims (01/May) 540,000

Louisa Heath