Australian Dollar (AUD) Benefits from Strong Manufacturing Activity
The Australian Dollar (AUD) rose against its peers at the end of last week, as Australia’s manufacturing sector enjoyed increased activity in March.
The S&P manufacturing PMI revealed an increase in manufacturing, as manufacturers added new staff, lifted sales and continued to expand production. Robust demand conditions also persisted despite a renewed rise in Covid cases and domestic flooding disruptions.
Looking ahead, Australian retail sales are expected to have increased so far this year, with February’s data expected to print at 1.8%. If forecasts are correct, the ‘Aussie’ may enjoy further tailwinds.
New Zealand Dollar (NZD) Climbs on AUD Strength
The New Zealand Dollar (NZD) enjoyed upside on Friday despite a lack of significant NZ data, as a stronger Australian Dollar lent support.
Earlier in the week, business confidence was revealed to have improved in March; early on Friday, consumer confidence was shown to have fallen slightly – although this did little to dampen NZD sentiment.
Into today, a lack of data leaves the ‘Kiwi’ to trade on risk sentiment alongside AUD dynamics – if the ‘Aussie’ continues to firm, NZD may also receive a boost.
Pound (GBP) Subdued by Muted Risk Appetite
The Pound (GBP) came under pressure at the end of last week, as bearish trading sentiment limited gains for the currency.
Despite ongoing peace talks between Ukraine and Russia, Vladimir Putin did not seem to have honoured promises to withdraw troops from the Kyiv area, as the mayor of the city reported ‘huge’ battles to the north and east of the capital.
Also denting Sterling was disappointing manufacturing data, as the UK’s S&P PMI missed forecasts.
Speeches from several Bank of England (BoE) officials may affect GBP exchange rates today. If a dovish tone is struck, the Pound could fall against its peers.
Euro (EUR) Trades Unevenly on Sky-High Inflation Figures
The Euro (EUR) failed to benefit fully from Friday’s inflation figures, as European Central Bank (ECB) member Philip Lane gave a dovish interpretation of the data.
In an address to broadcaster CNBC, Lane warned that the ECB needs time to analyse the fallout from inflation data, adding that if the inflation outlook deteriorates, the central bank will rethink its timeline for ending Quantitative Easing (QE).
Germany’s trade balance could influence Euro trading today – if the trade surplus increases as expected, EUR may firm on a recovery in exports.
US Dollar (USD) Trades Mixed as Payroll Data Misses Expectations
The US Dollar (USD) benefitted from risk-off trading sentiment at the end of last week but came under pressure as non-farm payroll data printed below forecasts.
The US economy added 431K payrolls in March of 2022 as opposed to the 490K expected – however, an upward revision to February’s data helped to limit downside as the initial figure of 678K was recalculated at 750K.
Looking ahead, the release of the latest US factory orders figures overnight could dent the ‘Greenback’, as demand for US manufactured goods is expected to have declined by 0.6% in February.
Canadian Dollar (CAD) Recovers on Manufacturing Data
The Canadian Dollar (CAD) was able to firm against several peers on Friday, following a brief downturn, as better-than-expected manufacturing data counterbalanced weakening oil prices.
The S&P Global Manufacturing PMI for March printed over expectations at 58.9, above last month’s 56.6.
Data Releases
Apr 4th 11:30 AUD Retail Sales Final (Feb) 1.8%
Apr 4th 16:00 EUR German Balance of Trade (Feb) €7.1bn
Apr 4th 19:05 GBP BoE Gov Bailey Speech N/A
Apr 5th 00:00 USD Factory Orders (Feb) -0.6%