Australian Dollar (AUD) Dips as Risk Appetite Weakens
The Australian Dollar (AUD) lost some of its footing ahead of the weekend thanks to a softening of market risk appetite.
Anticipation ahead of the release of the latest Chinese trade data and the unexpected strength of the latest US non-farm payrolls report saw the ‘Aussie’ come under a degree of pressure. Worries over the delayed supply of some Covid-19 vaccines and doubts over the health of the global economy also kept AUD exchange rates on the back foot.
However, if market confidence sees a resurgence, this could offer the Australian Dollar a solid leg up.
Pound (GBP) Under Pressure while UK House Prices Miss
The Pound (GBP) struggled heading into the weekend, coming under pressure from strength in the US Dollar and risk-off trade.
Sterling experienced limited losses as the Halifax house price index failed to show any improvement on the month in February, suggesting the UK housing market has come under increased pressure since the start of the year, adding to existing worries over the relative strength of the first quarter GDP.
In the absence of fresh UK data releases in the days ahead, the Pound could struggle to make any particular headway against its rivals, although a speech from Bank of England governor Andrew Bailey drive additional movement.
Euro (EUR) Mixed after German Factory Orders Improvement
The Euro (EUR) was mixed during Friday’s European session even after a better-than-expected German factory orders reading.
Even though markets had expected to see a resurgence in orders on the month, the 1.4% rebound gave investors a significant boost in confidence. With the Eurozone’s powerhouse economy showing some signs of recovering its lost momentum in the early months of 2021, the Euro received some support.
A similarly strong showing from the corresponding German industrial production figure could see EUR exchange rates make gains this evening.
US Dollar (USD) Rallies on Surge in Non-Farm Payrolls
The US Dollar (USD) gathered strength in the wake of an unexpectedly strong surge in February’s non-farm payrolls report.
While forecasts had pointed towards a solid improvement in payrolls on the month, the extent of the 379,000 surge saw USD exchange rates buoyed across the board. This sharp increase helped to push the corresponding unemployment rate down from 6.3% to 6.2%, indicating that the labour market found some degree of strength over the course of the last month.
A solid uptick in wholesale inventories for January could encourage the US Dollar to gain further ground over the course of the night.
Canadian Dollar (CAD) Boosted as Trade Balance Returns to Surplus
The Canadian Dollar (CAD) strengthened on the back of the positive nature of January’s set of trade data.
As the trade balance unexpectedly returned to a state of surplus at the start of the year, instead of showing a slight narrowed deficit, the appeal of the Canadian Dollar picked up. Coupled with another strong day for the oil market, which drove prices to a 14-month high, CAD exchange rates were able to push higher.
However, unless the oil market can hold onto its bullish trend, the commodity-correlated Canadian Dollar could face some selling pressure in the days ahead.
New Zealand Dollar (NZD) Lacks Support
The New Zealand Dollar (NZD) struggled to find any particular demand in the midst of reduced market risk appetite.
Support for the risk-sensitive ‘Kiwi’ remained limited in the face of the lack of any fresh domestic data releases, giving investors little incentive to buy back into the currency. As the US Dollar found fresh strength this also put pressure on NZD exchange rates.
In the wake of the latest Chinese trade data the mood towards the New Zealand Dollar may see some improvement, though.
Data Releases
18:00 EUR Germany Industrial Production (Jan) 0.2%
02:00 USD Wholesale Inventories (Jan) 1.3%