Pound Sterling (GBP)
Pound Sterling edged higher on Thursday thanks to positive domestic data, although the UK asset is still holding a comparatively weak trade weighting with political uncertainty dampening investor confidence. Whilst February’s Retail Sales contracted by -0.2% on the month, the result was far better than expectations of -1.0%. Additionally, February’s annual Retail Sales growth reached 4.1% which significantly eclipsed the median market forecast 3.4% growth. What’s more, February’s BBA Loans for House Purchase may have shown reduced mortgage approvals but the figure is still robust. Sterling’s fractional gains are not projected to be long-lasting, however, as ‘Brexit’ uncertainty continues to weigh on investor confidence.
Today’s European economic data produced mixed results erring towards negativity. This saw the single currency edge lower versus a number of its major peers. Of particular disappointment was the European Central Bank (ECB) Economic Bulletin. The report showed that policymakers reduced both growth and inflation outlook in the face of weak commodity prices and slowing global economic growth. The depreciation was somewhat slowed, however, after German import prices contracted well beyond anticipation.
US Dollar (USD)
As traders await the US Durable Goods Orders report, the US Dollar cooled from recent highs. However, safe-haven demand remains strong in the face of weaker oil prices and geopolitical uncertainty. This is likely to allow the US asset to avoid a significant depreciation even if durables data matches estimates of a -3.0% contraction in February. Recent hawkish speeches from Federal Reserve officials with regards to the likelihood of near-term policy tightening is also likely to support demand for the North American currency.
Australian Dollar (AUD)
Although intervention from the People’s Bank of China (PBoC) is usually supportive of improved market sentiment, the latest offerings from China’s central bank has caused many to speculate that the Yuan fixing is in preparation for an April Federal Reserve rate hike. Should the Fed indeed hike in April the Australian Dollar will likely dive versus its major peers. This will actually be considered a massive positive for the Reserve Bank of Australia (RBA) after long-term complaints regarding ‘Aussie’ (AUD) overvaluation.
New Zealand Dollar (NZD)
Much like its Oceanic counterpart, the New Zealand Dollar softened in response to safe-haven demand and increased bets of a near-term Federal Reserve rate hike. However, the outlook for the NZD is slightly improved from recent weeks after the Fonterra Co-Operative Group saw first-half profits jump. Although the ‘Kiwi’ (NZD) is trending lower versus most of its peers, a higher-than-expected trade surplus in February prevented larger depreciation.
Canadian Dollar (CAD)
After US data showed oil stockpiles eclipsed expectations three-fold, the price of crude oil dived by over 3% to trend below $40 a barrel. This has weighed heavily on demand for the Canadian Dollar. Additionally, increased bets of a near-term Federal Reserve rate hike has also greatly reduced the appeal of the ‘Loonie’ (CAD).