Pound Sterling (GBP)
Today’s British economic data produced disappointing results. However, Pound Sterling avoided significant depreciation versus most of its peers thanks to corrective trading. Nationwide House Prices saw slower-than-expected growth in February on both a monthly and annual basis. Perhaps most disappointing however, given that it is the single largest component of UK gross domestic product, was services output. The Services PMI was predicted to fall from 55.6 to 55.1, but output actually slowed to 52.7. This suggests that the tepid sectoral growth thus far in 2016 will mean a very small rate of economic expansion in the first-quarter.
The Euro edged fractionally higher versus its major peers today thanks to registering mostly positive domestic data results. Of particular significance was January’s Eurozone Retail Sales which advanced by 2.0%; bettering the median market forecast 1.3% sales growth. The single currency failed to fully capitalise on this result, however, with speculation of European Central Bank (ECB) policy easing dominating trader focus. Many analysts now predict that the ECB will adopt negative interest rates and expand asset purchases.
US Dollar (USD)
With Federal Reserve uncertainty weighing heavily on demand for the US Dollar, the North-American asset is holding steady versus most of its peers ahead of key Non-Manufacturing/Services Composite data. Given external risks presented from the global economic slowdown, many experts believe that the Federal Reserve will delay tightening policy for a considerable time to come. Political uncertainty is also having a detrimental impact on USD demand after some of the more controversial Presidential candidates were shown to be gaining ground.
Australian Dollar (AUD)
Commodity-correlated assets climbed during Thursday’s European session thanks to positive services data out of China. February’s China Services PMI did slow from 52.4 to 51.2, but this is still considered robust growth compared to massive sectoral declines seen recently. Asian stocks advanced in response to the data which aided demand for the Australian Dollar. A better-than-expected result from Australia’s Trade Balance data, which showed the deficit narrowed by more than expected, also aided the ‘Aussie’ (AUD) uptrend.
New Zealand Dollar (NZD)
Similarly to its Oceanic neighbour, the New Zealand Dollar advanced in response to rising Asian stocks and positive Chinese ecostats. Also supportive of demand for the antipodean currencies is the prospect of long-term delays to a Federal Reserve rate hike. Additionally, the likelihood of easing from the ECB should support both the ‘Aussie’ and the ‘Kiwi’ (NZD) as it will likely further reduce the likelihood of a Fed rate hike in the near-term.
Canadian Dollar (CAD)
US oil inventories data showed stocks were massively higher than had been predicted. This caused oil prices to edge lower, but the impact was minimal considering. As a result, the Canadian Dollar avoided a larger depreciation.