Australian Dollar (AUD) Slumps as Service Sector Contracts
Confirmation of a contraction in Australia’s services sector pulled the Australian Dollar (AUD) lower yesterday. The final reading of March’s PMI printed at 48.6.
AUD also continued to struggle in the aftermath of the Reserve Bank of Australia’s (RBA) recent dovish interest rate decision. A policy divergence between the RBA and the Reserve Bank of New Zealand (RBNZ) added to this sentiment.
The ‘Aussie’ could fall further today if the RBA’s financial stability review raises any concerns for AUD investors.
New Zealand Dollar (NZD) Bolstered by Surprise RBNZ 50bps Rate Hike
The New Zealand Dollar (NZD) jumped on Wednesday after the RBNZ’s interest rate decision. The central bank surprised investors with a 50bps rate hike, rather than the anticipated 25bps move.
The RBNZ signalled that inflation in New Zealand remains persistently high, and that further hikes would likely be necessary.
The ‘Kiwi’ could see additional gains today if Chinese PMI data remains strong.
Pound (GBP) Softens following Services PMI
Yesterday saw the Pound (GBP) trend lower following the UK’s final services PMI.
Although the survey revealed an expansion in the UK’s vital services sector, signs of easing inflationary pressures dampened Bank of England (BoE) rate rise bets somewhat.
GBP could trade in a narrow range today amid a lack of significant data.
Euro (EUR) Muted despite Positive Data
The Euro (EUR) saw subdued movements on Wednesday. Signs the European Central Bank (ECB) may slow its pace of policy tightening kept pressure on EUR following dovish comments from ECB policymaker Boris Vujčić.
The single currency found some support from upbeat Eurozone data, however. German factory orders surged by more than forecast, whilst service sector performance remained positive across the Eurozone.
A lack of significant data could leave the Euro at the mercy of shifts in risk appetite today. A souring mood could bolster EUR.
US Dollar (USD) Slips amid Further Evidence of Cooling Labour Market
Signs of slack in the US labour market put some pressure on the US Dollar (USD) yesterday. ADP employment figures for March fell by more than forecast.
However, a downbeat market mood lent the safe-haven currency notable support. A larger-than-forecast slowdown in US service sector activity just seemed to sour the mood further overnight.
Looking ahead, the latest jobless claims are expected to remain close to previous figures, which could provide a boost to USD tonight.
Canadian Dollar (CAD) Muted by Oil Price Decline
The commodity-tied Canadian Dollar (CAD) found some success yesterday due to USD’s strength. However, a downtick in oil prices severely capped CAD’s upside potential.
The ‘Loonie’ could see losses today if March’s unemployment rate ticks higher as anticipated.
Apr 6th 11:30 AUD Balance of Trade (Feb) AU$11.1bn
Apr 6th 12:00 AUD RBA Financial Stability Review
Apr 6th 22:30 CAD Unemployment Rate (Mar) 5.1%
Apr 6th 22:30 USD Initial Jobless Claims (1/Apr) 200,000
Apr 7th 00:00 CAD Ivey PMI (Mar) 49
Apr 7th 00:00 USD Fed Bullard Speech