Australian Dollar
Iron ore prices may have pared some of the gain recorded at the start of last week, but the slightly firmer price of Australia’s key commodity continued lending the Australian Dollar support before the weekend.
The ‘Aussie’ also benefited from heightened risk-appetite as the People’s Bank of China (PBoC) eased concerns relating to the economic slowdown in China and investors bet that the Federal Open Market Committee (FOMC) would vote to leave interest rates on hold this week.
With the European Central Bank (ECB) loosening fiscal policy and global economic conditions remaining unstable, the Fed is unlikely to risk hiking rates again when it gathers on Thursday. As lower US borrowing costs are good news for Australia, the AUD/USD exchange rate closed out last week trading in the region of 0.75. The ‘Aussie’ was also up on the Euro and Pound.
This week Australian market-movers to be aware of include the publication of minutes from the central bank’s last policy meeting and domestic employment figures. If the RBA minutes are particularly dovish in tone or the jobs data indicates a weakening in the labour market, the Australian Dollar’s bullish run could end.
Sterling
With few high profile UK data releases to prop up the Pound and ‘Brexit’ grumblings persisting, the AUD/GBP exchange rate advanced from a low of 0.5200 to a high of 0.5293 over the course of last week.
The only real Sterling support came in the form of slightly better-than-forecast industrial and manufacturing data for the UK, but with the EU referendum debate in full force and the ECB’s interest rate decision sparking intensive market movement, any Pound gains were limited and brief.
This week could prove more volatile for AUD/GBP trading with the Bank of England (BoE) due to deliver its latest interest rate decision. No policy action is expected but the tone of the accompanying minutes could be particularly dovish in light of recent remarks from BoE chief Mark Carney relating to the potential repercussions of a UK exit from the EU.
Should that prove to be the case, Sterling is likely to be pressured lower. Other UK news to focus on includes employment figures for January. A decline in average earnings or a disappointing increase in employment would also be GBP negative.
Euro
A very unexpected market reaction to the European Central Bank’s (ECB) latest policy decision saw the Euro experience violent swings in value in the latter half of last week. Fears that the ECB wouldn’t be aggressive enough proved unfounded as the central bank cut interest rates and expanded quantitative easing by more-than-forecast.
While the Euro initially plummeted in response to the action, ECB President Mario Draghi inferred that rates wouldn’t be cut further and this sign that the central bank is out of ammo sent the common currency rocketing higher once again.
Profit-taking and concerns relating to deflationary pressure in Germany later brought the Euro’s bullish run to an end however and the AUD/EUR exchange rate closed out the week little changed from its opening levels of 0.6743.
US Dollar
A lack of high profile US data and speculation that the FOMC might adopt a particularly dovish stance at this week’s gathering had a negative impact on ‘Greenback’ demand and helped the AUD/USD exchange rate surge from a low of 0.7395 to a multi-month high of 0.7579.
With inflation and wage growth levels in the US providing policymakers with cause for concern and the global economic outlook still looking clouded the Fed is highly unlikely to increase borrowing costs this week. If the central bank adopts a surprisingly upbeat tone and keep 2016 rate hike hopes alive the US Dollar could rally, but hints of a neutral/negative interest rate outlook may see the AUD/USD exchange rate achieve new highs.
Canadian Dollar
Despite the Bank of Canada (BOC) opting to leave interest rates on hold last week, the Canadian Dollar failed to find much impetus to rally amid falling oil prices.
While some industry experts believe oil prices have bottomed out, the negative impact of historic low ‘black gold’ prices on Canadian growth in the first quarter of 2016 may push the BOC into cutting interest rates before too long and that expectation is keeping demand for the ‘Loonie’ depressed.
A surprising increase in Canada’s unemployment rate from 7.2% to 7.3% also pushed the Canadian Dollar lower. Canadian housing, retail sales and inflation data can be expected to drive AUD/CAD movement this week.
New Zealand Dollar
After the Reserve Bank of New Zealand (RBNZ) made the surprising decision to cut borrowing costs last week the New Zealand Dollar plummeted across the board. The AUD/NZD exchange rate spiked to a high of 1.1283 and largely held gains heading into the weekend as soft dairy prices kept the ‘Kiwi’ under pressure.
With New Zealand set to publish growth and consumer confidence data in the near future, the AUD/NZD exchange rate is liable to fluctuate.
Data Released
March 14th 08:30 NZD NZD Performance Services Index (FEB)
March 14th 21:00 EUR Eurozone Industrial Production w.d.a. (YoY) (JAN)
March 15th NZD Dairy Auction Avg. Winning Price MT (MAR 15)
March 15th 11:30 AUD RBA March Meeting Minutes
March 15th 21:00 EUR Eurozone Employment (YoY) (4Q)
March 15th 23:30 USD Advance Retail Sales (MoM) (FEB)