Australian Dollar (AUD) Trends Higher after RBA Minutes
The Australian Dollar (AUD) held onto a largely positive footing in the wake of the release of the Reserve Bank of Australia’s (RBA) meeting minutes.
As the minutes offered little in the way of surprises, affirming the central bank’s intention to keep interest rates ‘lower for longer’, reaction to the release proved limited. A solid uptick in the quarterly house price index also offered support to the ‘Aussie’, meanwhile, pointing towards a more resilient domestic housing market.
If February’s Westpac leading index picks up on the month as forecast, AUD exchange rates could stage further gains over the course of the day.
Pound (GBP) Weighed Down by Latest Brexit-Based Tensions
The Pound (GBP) fell out of favour on the back of the EU’s decision to pursue legal action against the UK over the Northern Ireland border protocol.
This latest sign of tension between the two sides cast a fresh Brexit-based shadow over the UK economy, especially as trade disruption has already risen since the start of the year. In the absence of any fresh encouraging developments surrounding the rollout of Covid-19 vaccines, there was little to keep the Pound from weakening.
Growing anticipation for the Bank of England’s (BoE) March policy meeting could see the Pound shedding additional ground.
Euro (EUR) Bolstered by Rising German Economic Sentiment
The Euro (EUR) rallied as Germany’s ZEW economic sentiment rose further than forecast in March, jumping from 71.2 to 76.6.
With sentiment within the Eurozone’s powerhouse economy recovering, the prospect of a negative first quarter growth rate seemed to diminish, to the benefit of EUR exchange rates.
Even so, another negative month of Eurozone construction output may still put a dampener on the Euro in the near term.
US Dollar (USD) Weakens as Retail Sales Plunge
The US Dollar (USD) faltered thanks to a deeper-than-expected contraction seen in the latest US retail sales data.
While investors had anticipated some decline in sales growth during February, the extent of the -3% slump left the US Dollar on a weaker footing against its rivals. As both industrial and manufacturing production also saw a sharp slump in the last month, confidence in the relative resilience of the US economy diminished, leaving USD exchange rates on a softer footing.
Ahead of the Federal Reserve’s March policy announcement the US Dollar may struggle to return to an uptrend.
Canadian Dollar (CAD) Holds Positive Footing on Hopes of Oil Price Gains
The Canadian Dollar (CAD) benefitted from some weaker rivals and the prospect of further oil supply disruption.
With markets betting that Saudi Arabia could face further attacks on its oil supplies, the odds of a continued rise in prices gave investors incentive to favour the Canadian Dollar. Although doubts over the strength of the Canadian economy linger, this was not enough to put a dampener on CAD exchange rates.
A solid uptick in the inflation rate could help to extend the Canadian Dollar’s uptrend overnight.
New Zealand Dollar (NZD) Softens as Credit Card Spending Slumps
The New Zealand Dollar (NZD) lost some ground as January’s credit card spending data showed a sharp contraction on the month.
Evidence that consumer spending has weakened significantly since the start of the year left the ‘Kiwi’ lacking in any real support against its rivals.
Lingering worries over the health of the New Zealand economy look set to keep the New Zealand Dollar lacking in any major appeal in the near term.
Data Releases
11:30 AUD Westpac Leading Index (Feb) 0.4%
21:00 EUR Eurozone Construction Output (Jan) -1.6%
23:30 CAD Inflation Rate (Feb) 1.3%
23:30 USD Building Permits (Feb) -7.2%