Australian dollar (AUD) supported by falling unemployment
Australian unemployment dropped more than forecast in February, yielding tailwinds for the Australian dollar (AUD) during yesterday’s trade.
Compared to January’s figure of 4.1%, unemployment fell to 3.7% and suggested improving employment conditions. However, this was undercut by a mixed slate of preliminary PMIs for March.
This morning, the Reserve Bank of Australia (RBA) publishes its latest financial stability review. If the bank presents a pessimistic economic outlook, the ‘Aussie’ could slip.
New Zealand dollar (NZD) pressured by shock economic contraction
Yesterday, a shock contraction in New Zealand’s fourth-quarter GDP data for 2023 weighed on the New Zealand dollar (NZD).
On a quarterly basis, the New Zealand economy contracted by 0.1%, whereas markets anticipated growth of 0.1%. As this marked the second consecutive quarter of contraction, confirmation of a technical recession weighed on the ‘Kiwi’.
NZD could regain some ground today as investors respond to February’s trade data which released earlier this morning.
Pound (GBP) craters as BoE opens door to rate cuts
Yesterday, the pound (GBP) sank in the aftermath of the Bank of England’s (BoE) latest interest rate decision.
Previously hawkish policymakers shifted their votes to a hold, and the BoE appeared to open the door to discussing rate cuts. Because of this, markets began to bet on the timing of the first rate cut, severely weakening GBP.
This evening brings the release of the latest UK retail sales data. As a 0.3% decline is forecast for February’s levels, Sterling could weaken further.
Euro (EUR) rattled by middling PMI data
Mixed PMI readings unsettled the euro (EUR) during Thursday’s session, as Eurozone manufacturing activity contracted further.
Although the bloc’s service sector grew more than expected in March, continued weakness in the Germany-dominated manufacturing sector weighed down EUR.
German economic news is likely to remain the focus for EUR today. If the Ifo business climate index remains near record lows, the euro may slip further.
US dollar (USD) rebounds following post-Fed selloff
The US dollar (USD) plummeted in the wake of the Federal Reserve’s interest rate decision early on Thursday morning, as the Fed unexpectedly maintained its projection for three rate cuts this year.
However, USD was able to regain ground overnight, having entered oversold conditions. Strong US economic data also supported the ‘greenback’.
Today, as there is little in the way of data drivers, risk appetite could influence the safe-haven currency.
Canadian dollar (CAD) boosted by rising US dollar
Despite falling oil prices, the Canadian dollar (CAD) strengthened against its peers due to its positive link to the US dollar.
Later tonight, Canada’s retail sales data for January is due to print. Economists are anticipating a fall of 0.4%, which could weaken CAD exchange rates.
Data Releases
Mar 22nd 10:30 AUD RBA Financial Stability Review
Mar 22nd 17:00 GBP Retail Sales (Feb) -0.3%
Mar 22nd 19:00 EUR DE Ifo Business Climate (Mar) 86
Mar 22nd 22:30 CAD Retail Sales (Jan) -0.4%