Australian Dollar
Positive domestic data boosted the Australian Dollar yesterday but US data released early this morning tipped the ‘Aussie’ into a decline. The outlook for domestic monetary policy was boosted after the Westpac consumer confidence index for February showed a 2.3% increase to 99.6. Improving sentiment suggests households will feel more comfortable spending their disposable income, which could boost inflation and therefore necessitate monetary tightening from the Reserve Bank of Australia (RBA).
Australian unemployment data is released today; forecasts are positive and so the ‘Aussie’ could appreciate.
Sterling
The Australian Dollar to Pound Sterling exchange rate made solid gains yesterday after disappointing UK data. Wage growth unexpectedly slowed, dropping from 2.8% to 2.6% overall and from 2.7% to 2.6% excluding bonuses in December. With the latest inflation likely too weak to tip the Bank of England (BoE) into beginning a tightening cycle, the sluggish pace of wage increases is likely to slow consumer spending. This could drag on the UK’s dominant service sector, choking economic activity.
Euro
The Euro was soft yesterday thanks to a lack of supportive factirs, with the day’s thin data releases unable to dispel the cloud of uncertainty hanging over the Greek bailout discussions. The deadlock between Greece and its creditors was still in place, but European Economic and Financial Affairs Commissioner Pierre Moscovici commented that progress was being made. ‘I am hopeful,’ he tweeted, although this on its own was not enough to shift investors out of their cautious state of mind.
The account of the latest European Central Bank (ECB) monetary policy meeting will be released late tonight.
US Dollar
The US Dollar made small advances after this morning’s early data releases. Consumer price growth jumped from 2.1% to 2.5%, with core price growth rising from 2.2% to 2.3%. Advance retail sales data for January also beat forecasts, weakening from an upwardly-revised 1% to 0.4%, instead of slumping to just 0.1% growth. With a further public appearance by Federal Reserve Chair Janet Yellen shortly after, however, US Dollar gains were held in check as investors focussed on the potential for the monetary policy outlook to change.
Initial jobless claims figures for the US will be released early tomorrow morning.
Canadian Dollar
Risk appetite was favouring the Australian and New Zealand Dollars yesterday, leaving the Canadian Dollar only able to post gains against some of its safer peers. News that the European Parliament had voted to approve the Comprehensive Economic and Trade Agreement (CETA) with Canada helped give the ‘Loonie’ some strength. A 58% majority voted in favour of the deal, with opposition from more socialist and nationalist parties failing to win the vote. The deal could be implemented almost in full by the beginning of April. Stronger trade links with the EU will be a relief for Canadian officials at a time where the future of trade with the US, by far Canada’s biggest trade partner, remains uncertain.
New Zealand Dollar
Yesterday’s session was devoid of New Zealand data, but the rise in risk-appetite helped boost the ‘Kiwi’. Expectations of a US rate hike in March may have been climbing, but there had been enough notes of caution from Janet Yellen and fellow Fed official Dennis Lockhart to suggest that three rate hikes in 2017 was far from certain to keep demand for risk alight.
The ANZ consumer confidence index is the only New Zealand data of note released today.
Data Released
February 16th 11.00 NZD ANZ Consumer Confidence Index (FEB)
February 16th 11.30 AUD Employment Change (JAN) 10k
February 16th 23.30 EUR ECB account of the monetary policy meeting
February 17th 00.30 USD Initial Jobless Claims (FEB 11) 245k