Australian Dollar (AUD) rises despite softer GDP
The Australian Dollar (AUD) initially stumbled yesterday after Australia’s latest GDP data missed forecasts.
However, AUD managed to shake off the weaker figures and rise on the news that the economy had still expanded 0.2% in the fourth quarter of 2023. An improving market mood also lifted the ‘Aussie’ Dollar.
This morning, Australia’s latest balance of trade figure is due to be published. If the country’s trade surplus expanded in January as forecast, the ‘Aussie’ could climb.
New Zealand Dollar (NZD) rebounds on AUD correlation
The New Zealand Dollar (NZD) traded in tandem with the ‘Aussie’ yesterday, initially stumbling before rallying through the afternoon and evening.
NZD’s correlation with AUD and risk-sensitive nature helped the ‘Kiwi’ gain ground.
With New Zealand economic data thin on the ground today, market sentiment could drive the New Zealand Dollar once again.
Pound (GBP) stumbles as UK unveils Spring Budget
The Pound (GBP) struggled to attract support yesterday, with the UK currency wavering lower against its stronger peers, as Chancellor Jeremy Hunt unveiled his Spring Budget.
While the Budget contained measures designed to boost growth, the accompanying forecast from the Office for Budget Responsibility (OBR) said UK inflation would fall below 2% within a few months. This boosted Bank of England (BoE) interest rate cut bets.
Turning to today, UK data is in short supply. Therefore, Sterling may trade without a clear direction.
Euro (EUR) climbs on strong German trade data
The Euro (EUR) rose yesterday after surprisingly strong trade figures from Germany raised hopes for the Eurozone’s largest economy.
In addition, EUR benefitted from its strong negative correlation with the US Dollar (USD), as the American currency faced notable selling pressure.
In the spotlight tonight is the European Central Bank’s (ECB) interest rate decision. The focus is on the bank’s forward guidance. Any dovish hints will likely sink the single currency.
US Dollar (USD) slides as Treasury yields fall
The US Dollar fell sharply yesterday as a decline in US Treasury bond yields dragged the ‘Greenback’ lower.
The safe-haven currency was also pressured by a risk-on market mood, as investors abandoned USD in favour of riskier assets.
Tonight, the latest US jobless claims figure is due out ahead of Federal Reserve Chair Jerome Powell’s second day of testimony. If the two events fuel rate cut bets, USD could decline.
Canadian Dollar (CAD) rebounds as BoC pushes back on rate cut bets
After initially falling, hitting multi-month lows against some peers, the Canadian Dollar (CAD) then leapt higher yesterday in the wake of the Bank of Canada’s (BoC) policy decision.
While the BoC left rates unchanged, as expected, a pushback against rate cut bets sparked a rally in CAD.
Looking forward to this evening, Canada’s latest trade figures could impact CAD exchange rates. If exports remained weak in January, the ‘Loonie’ could face pressure.
Data Releases
Mar 7th 10:30 AUD Balance of Trade (Jan) AU$11.5bn
Mar 7th 23:15 EUR ECB Interest Rate Decision 4.5%
Mar 7th 23:30 CAD Balance of Trade (Jan) CA$0.1bn
Mar 7th 23:30 USD Initial Jobless Claims (02/Mar) 215,000
Mar 8th 01:00 USD Fed Chair Powell Testimony