Australian dollar (AUD) knocked by narrowing trade surplus
The Australian dollar (AUD) trended lower through yesterday’s session in the wake of Australia’s latest trade figures.
Australia’s trade surplus shrank to a three-month low in December, as export growth slowed from 4.2% to 1.1% over this period.
AUD data is thin on the ground today, which may see any movement in the ‘Aussie’ driven primarily by market risk dynamics. A gloomy mood could reinforce the AUD selling pressure.
New Zealand dollar (NZD) pressured by cautious mood
The New Zealand dollar (NZD) also faced headwinds on Thursday as a subdued market mood curbed demand for the risk-sensitive currency.
In the absence of any notable domestic data, the ‘kiwi’ may be left vulnerable to shifts in market sentiment today.
Pound (GBP) slumps on dovish BoE rate cut
The pound (GBP) tumbled on Thursday following a 25 basis point interest rate cut from the Bank of England (BoE).
While the rate cut was largely priced in, GBP investors were spooked by the surprisingly dovish split within the bank’s Monetary Policy Committee, as well as the halving of the bank’s 2025 UK growth forecast.
BoE Chief Economist Huw Pill is set to speak today. If he seeks to temper BoE rate cut bets, the pound may rally.
Euro (EUR) wavers despite positive German data
The euro (EUR) found itself trapped in a narrow range yesterday. Bolstering EUR sentiment was data showing a much stronger-than-expected rebound in German factory orders in December.
However, the single currency’s upside potential was ultimately capped as a result of its negative correlation with the US dollar (USD).
Today sees the publication of Germany’s latest industrial production figures. If they impress similarly to the factory orders data, the euro might end the week on a high.
US dollar (USD) bolstered by risk-off flows
The US dollar strengthened yesterday as a negative shift in market risk appeal bolstered the currency’s safe-haven appeal.
However, these gains were tempered by the latest US initial jobless claims, following a larger-than-expected increase in new unemployment claims at the start of February.
All eyes will be on the latest US non-farm payroll figures today. Expect to see USD exchange rates strengthen if January’s figures report another healthy expansion in the US labour market.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) edged higher on Thursday, supported by a modest rebound in oil prices.
Coming up, the ‘Loonie’ may come under pressure this evening as an expected rise in domestic unemployment is expected to stoke Bank of Canada (BoC) rate cut bets.
Data Releases
17:00 EUR German Industrial Production (Dec)
22:15 GBP BoE Pill Speech
23:30 CAD Unemployment Rate (Jan)
23:30 USD Non Farm Payrolls (Jan)