Australian Dollar (AUD) Falls after Disappointing Chinese GDP Targets
The Australian Dollar (AUD) dropped on Monday after China set lower-than-expected GDP targets for 2023. Due to the close trading relationship between Beijing and Canberra, AUD is often seen as a proxy currency for the Chinese economy.
Easing inflation ahead of the Reserve Bank of Australia’s (RBA) interest rate decision added to the Australian Dollar’s woes, as did a downbeat market mood.
With the RBA’s 25bps rate hike priced in today, markets will be looking to the central bank’s forward guidance for trading cues. Any hawkish signals could boost the ‘Aussie’.
New Zealand Dollar (NZD) Pulled Lower by Risk-Off Mood
A pullback in risk appetite dragged the risk-sensitive New Zealand Dollar (NZD) lower yesterday.
A downbeat mood in the commodities markets also weighed on the resource-linked ‘Kiwi’.
With no significant data today, movement in NZD is likely to be driven by any changes in market mood.
Pound (GBP) Mixed amid Lack of Data
A lack of market-moving UK data saw the Pound (GBP) trade without a clear directional bias yesterday.
Recent optimism around the Northern Ireland protocol – part of the UK-EU post-Brexit trade agreement – may have cushioned Sterling, while declining Bank of England (BoE) rate hike bets pressured the currency.
A forecast recovery in February’s retail sales could push Sterling higher today if the figures print as forecast.
Euro (EUR) Climbs as Lagarde Signals More ECB Hikes to Come
A risk-off mood pushed the Euro (EUR) higher on Monday. Hawkish comments from European Central Bank (ECB) President Christine Lagarde lent further support to EUR.
A larger-than-forecast fall in January’s Eurozone retail sales capped gains for the single currency, however.
Looking ahead, an expected downturn in German factory orders could add to the country’s poor outlook and weigh on the Euro.
US Dollar (USD) Firms amid Cautious Trade
The safe-haven US Dollar (USD) initially strengthened during yesterday’s European trading session thanks to a risk-averse market mood.
However, a downturn in January’s US factory orders saw the currency trim its gains later on.
Today, Federal Reserve Chair Jerome Powell is due to testify in front of Congress. Powell is widely expected to give hawkish signals regarding the central bank’s future approach to policy, which could push USD higher.
Canadian Dollar (CAD) Drops after Oil Prices Tumble
A more than 1% fall in crude oil prices prompted losses in the commodity-linked Canadian Dollar (CAD) yesterday. A worse-than-expected PMI report also pulled the ‘Loonie’ lower.
Looking to today, a lack of data could leave CAD at the mercy of any shifts in oil prices.
Data Calendar
Mar 7th 10:01 GBP BRC Retail Sales Monitor (Feb) 4.8%
Mar 7th 10:30 AUD Balance of Trade (Jan) AU$12.5bn
Mar 7th 13:30 AUD RBA Interest Rate Decision 3.6%
Mar 7th 17:00 EUR German Factory Orders (Jan) -0.9%
Mar 8th 01:00 USD Fed Chair Powell Testimony