Australian Dollar
Australian iron ore exports hit a record high in March, fanning hopes among producers that the current strong price is set to continue. Shipments from Port Hedland, the world’s largest bulk-export terminal, increased from 36.63 million tonnes to 39.53 million. Although the Australian economy is attempting to transition away from mining, a strong sector performance could still contribute significantly to economic growth, boosting trader appetite for the high-yield Australian Dollar.
Positive economic readings from China also provided a boost to the ‘Aussie’. The purchasing managers’ index for the services sector rose from 51.2 to 52.2, while March’s Composite PMI left contraction territory to rise to 51.3.
The only impactful data for Australia due today is the AiG Performance of Construction Index for March, which currently shows significant decline in the sector with a reading of 46.1.
Sterling
Little UK data was available to provide movement for Pound Sterling from an economic perspective yesterday. Politically, however, the Pound was buffered by the continued impact of the UK steel crisis and the aftermath of the ‘Panama Papers’. David Cameron came under renewed pressure to publicly explain his financial affairs after a series of less-than-transparent responses to questions regarding his assets.
Tuesday’s strong Services PMI did nothing to help Pound Sterling sentiment, with the positive result failing to eclipse the fact that the UK economy was likely to have slowed in the opening quarter of 2016.
Only low impact releases are due for the UK today, including housing price data and Unit Labour Cost figures.
Euro
The Euro put on a mixed performance yesterday. Weakness in overseas currencies allowed the common currency to make some gains, but overall sentiment was tepid. Another run of disappointing PMIs dampened trader appetite, with the Eurozone retail index dragged into contraction territory by a swift acceleration in the weakening of the French and Italian sectors. Germany’s Retail PMI showed improvement, but the nation’s Construction PMI dropped from 59.6 to 55.8.
German industrial production managed to better forecasts, but with last month’s figure revised significantly lower, the positive impact of this was somewhat muted.
The European Central Bank (ECB) will be the primary focus of investors today, with news from the ‘ECB and Its Watchers Conference’ and an account of the latest monetary policy meeting holding the potential to spark Euro movement.
US Dollar
Janet Yellen’s previous hints that the Federal Reserve will not be moved to act by strong economic data partially undermined the positive impact of yesterday’s ISM Non-Manufacturing/Services Composite for March. The index, which was expected to rise from 53.4 to 54.1 in fact hit 54.5. Mortgage applications also rose, increasing 2.7% after the previous -1% drop.
Trader hopes of a rate hike weren’t particularly lifted by the data, which kept the US Dollar on a weak trajectory verses many of the majors. In most cases it was overseas weakness rather than domestic strength that pushed the ‘Greenback’ higher.
Today promises two Fed speeches, from Loretta Mester and Robert Kaplan, as well as unemployment data.
Canadian Dollar
An upbeat outlook by a senior Bank of Canada (BOC) official and a strong recovery in oil prices did nothing to prevent the Canadian Dollar from weakening yesterday. Carolyn Wilkins, Senior Deputy Governor at the BOC, was upbeat on the Canadian economy’s ability to weather the impact of a continued slowdown in China, even suggesting it presented opportunities for Canadian exporters and businesses.
Meanwhile, Brent Crude posted a strong recovery with prices rising by around 2%, taking the international benchmark to around US$38.5 per barrel. The increase was brought about by rumours that US stockpiles would be lower-than-expected.
Building Permits data due today is expected to show a rise of 4% after last month’s -9.8% decline.
New Zealand Dollar
The recent rise in the price of dairy continued to boost the New Zealand Dollar yesterday, helped by US Dollar weakness. House prices also remained fairly consistent, with only a -0.2% year-on-year (YoY) dip to 11.4% recorded in March. The positive news from China also helped to shore up the ‘Kiwi’.
The sole piece of data from New Zealand today is the ANZ Truckometer Heavy for March.
Data Released
April 7th 08.30 USD Fed’s Bullard to Make Welcoming Remarks at St.Louis Lecture
April 7th 09.30 AUD AiG Performance of Construction Index (MAR)
April 7th 21.30 EUR ECB account of the monetary policy meeting
April 7th 22.30 CAD Building Permits (MoM) (FEB) 4%
April 7th 22.30 USD Initial Jobless Claims (APR 2) 270k
April 7th 22.30 USD Continuing Claims (MAR 26) 2170k