Australian Dollar (AUD) Bolstered by Greater-Than-Expected Trade Surplus
The Australian Dollar (AUD) firmed on Thursday as Australia’s balance of trade revealed a A$12.891bn surplus rather than A$9.05bn as expected.
Capping further gains was an overall risk-off mood, as Russian missile strikes in Ukraine intensified: as of yesterday, Russia claims to have killed 2,870 Ukrainian soldiers and ‘nationalists’.
Into today, Australian retail data may drive ‘Aussie’ exchange rates. According to January’s flash estimate, sales rose by 1.8% – if today’s release confirms this, AUD could enjoy tailwinds.
Pound (GBP) Trades Mixed on PMI Miss
The Pound (GBP) struggled to make any significant gains yesterday, despite climbing to a 5-year high against the Euro (EUR).
The release of the UK’s service-sector PMI applied some downside, printing at 60.5 rather than the 60.8 expected: inflationary pressures intensified in the sector, driving up input costs and consumer prices.
A lack of significant data today leaves Sterling to trade on external factors – if Russia continues to bomb Ukraine, weaker risk sentiment could sap GBP support.
Euro (EUR) Weakens amid Ukraine Crisis
The Euro (EUR) continued to retreat on Thursday as EUR investors remained wary of the situation in Ukraine and the possibility of European energy supplies being disrupted.
A greater-than-expected decrease in Euro area unemployment lent some support to the single currency, but further headwinds were exerted as a risk-off mood buoyed the US Dollar (USD). Due to the currencies’ strong negative correlation, USD strength applies EUR downside.
Looking ahead, the Euro faces an uphill battle through the end of the week as war in Ukraine continues to cast a dark shadow over Europe.
US Dollar (USD) Fluctuates on Risk Sentiment, ISM PMI
The US Dollar wavered yesterday as risk-off trading was briefly undermined by a second round of peace talks, ahead of which a Russian negotiator said a ceasefire was on the agenda.
Market sentiment remained risk-off overall though, as the International Criminal Court (ICC) launched an investigation into war crimes perpetrated by Russia against Ukraine.
Weighing further on the ‘Greenback’ was the release of February’s ISM non-manufacturing PMI, which revealed that economic activity in the US fell rather than climbing as expected.
Looking ahead, non-farm payrolls and unemployment data could affect trading today. If US unemployment fell in February as expected, USD could enjoy tailwinds.
Canadian Dollar (CAD) Wavers ahead of Macklem Speech
The Canadian Dollar (CAD) lost some support on Thursday following Wednesday’s fairly dovish policy announcement from the Bank of Canada (BoC). Oil prices also retreated slightly, applying further downside.
Tomorrow’s Ivey PMI may lend some support to the ‘Loonie, if it reports an increase in economic activity in February as expected.
New Zealand Dollar (NZD) Climbs Overall despite Lack of Data
The New Zealand Dollar (NZD) rose against several peers yesterday, as strength in the ‘Aussie’ lent upside support. Commodity prices also rose for dairy – New Zealand’s main export.
Data Releases
Mar 4th 09:00 USD Fed Williams Speech N/A
Mar 4th 10:30 AUD Retail Sales Final (Jan) 1.8%
Mar 4th 17:00 EUR German Balance of Trade (Jan) €9.2bn
Mar 4th 18:30 EUR German Construction PMI (Feb) 54.6
Mar 4th 20:00 EUR Retail Sales (Jan) 1.3%
Mar 4th 23:30 USD Non-Farm Payrolls (Feb) 400K
Mar 4th 23:30 USD Unemployment Rate (Feb) 3.9%
Mar 5th 01:00 CAD Ivey PMI s.a (Feb) 52