Australian Dollar (AUD) Trades Mixed as GDP Prints Above Forecast
The Australian Dollar (AUD) traded in a narrow range in midweek trade, as conflict in Ukraine exerted downside while upbeat GDP figures lent support.
Australia’s economy expanded 3.4% in the final quarter of 2021, exceeding market forecasts: this was the strongest GDP reading since the third quarter of 2020.
The country’s trade balance may influence AUD today – Australia’s surplus is expected to have increased to AU$9.05bn in January 2021, potentially buoying ‘Aussie’ sentiment.
Pound (GBP) Falters on Lack of Significant UK Data
The Pound (GBP) wavered yesterday, as a lack of significant UK data exposed Sterling to losses.
Worries about the impact of aggressive sanctions against Russia weighed upon GBP sentiment, limiting rate hike expectations for the Bank of England (BoE); policymaker Catherine Mann also cautioned that inflation could peak at 7.25% in April.
The UK’s finalised services PMI could affect GBP exchange rates today, with a surprised to the upside –similar to Tuesday’s manufacturing PMI- potentially buoying Sterling.
Euro (EUR) Sinks Following High Inflation Reading
The Euro (EUR) was unable to make significant gains on Wednesday despite a strong Eurozone consumer price index. Inflation in the bloc soar to a record high of 5.8%, well above expectations of a 5.4% reading.
Higher-than-expected inflation puts the European Central Bank (ECB) in a difficult position, considering policymakers’ dovish instincts given the situation in Ukraine.
Into today, January’s unemployment rate is expected to decline, lending possible EUR support.
US Dollar (USD) Supported by Employment Data
The US Dollar firmed overnight as the latest US ADP employment data revealed a greater-than-expected increase in employment growth.
Private businesses in the US hired 475K workers in February 2022, beating market expectations of a 388K rise as the labour market recovers. Intermittent risk-off sentiment also bolstered the ‘Greenback’, although hopes of progress via Russia/Ukraine talks limited significant tailwinds.
Today’s ISM non-manufacturing PMI is forecast to reveal in increase in service-sector activity, which could boost USD further.
Canadian Dollar (CAD) Climbs as BoC Raises Interest Rate
The Canadian Dollar (CAD) firmed yesterday as the Bank of Canada (BoC) raised its interest rate to 0.5% as expected. Also lending support, crude prices rose above $110 per barrel, eclipsing 2014 highs as traders realised that harsh sanctions on Russia are disrupting global oil flows.
A speech from BoC Governor Tiff Macklem may influence trading today, buoying the ‘Loonie’ if he strikes a hawkish tone.
New Zealand Dollar (NZD) Fluctuates as Risk Aversion Falters
The New Zealand Dollar (NZD) traded mixed on Wednesday as Russian-Ukrainian ‘peace talks’ inspired hopes of a ceasefire, counterbalancing risk-off sentiment.
Nevertheless, a lack of NZ data exposed the ‘Kiwi’ to losses, while international tensions exerted significant downside.
Data Releases
Mar 3rd 08:00 AUD Markit Services PMI Final (Feb) 56.4
Mar 3rd 10:30 AUD Balance of Trade (Jan) A$9.05bn
Mar 3rd 18:55 EUR German Markit Services PMI Final (Feb) 56.6
Mar 3rd 19:00 EUR Markit Services PMI Final (Feb) 55.8
Mar 3rd 19:30 GBP Markit/CIPS Services PMI Final (Feb) 60.8
Mar 3rd 20:00 EUR Unemployment Rate (Jan) 6.9%
Mar 3rd 23:30 USD Initial Jobless Claims (26/Feb) 225K
Mar 4th 00:45 USD Markit Services PMI Final (Feb) 56.7
Mar 4th 01:00 USD ISM Non-manufacturing PMI (Feb) 61
Mar 4th 01:00 USD Fed Chair Powell Testimony N/A
Mar 4th 01:00 USD Factory Orders (Jan) 0.7%
Mar 4th 02:30 CAD BoC Gov Macklem Speech N/A