Pound Sterling (GBP)
Friday’s strong UK trade, industry and construction data continued to fuel demand for the Pound yesterday. The above-forecast reports suggested that the economy ended the year in better shape than first expected; a particularly heartening fact considering expectations had already been beaten by the final quarter GDP figures. There was a belief amongst analysts that the strong performance would see the quarter-on-quarter GDP figure revised up to 0.7%, driving the Pound higher.
While the Greek bailout discussions were still at an impasse, investors had reason to be optimistic yesterday. The latest European Commission forecasts were for strong economic growth for the stricken Hellenic nation over the coming years. 2017 GDP was pegged at 2.7%, with analysts predicting 2018 would see expansion of 3.1%. Creditors have largely been arguing about whether the Greek economy is strong enough to cope with the debt burden, so the latest projections improved hopes that a resolution to the stalemate could be found.
US Dollar (USD)
Donald Trump’s promised fiscal stimulus measures were back in focus yesterday, boosting the US Dollar. Investors were hoping that an upcoming speech to Congress would see the President outlining his ‘phenomenal’ tax reforms and his plans for infrastructure investment. Recently, the US Dollar has been rocked as traders begin to lose patience waiting for the President to focus on boosting the domestic economy, but hopes were high again and so the ‘Greenback’ rose.
Australian Dollar (AUD)
Investors were selling the Australian Dollar yesterday in favour of safe havens. It didn’t help that the International Monetary Fund (IMF) had released a remarkably dovish forecast for Australia and warned that interest rates needed to be slashed further. Without halving the official cash rate (OCR) to 0.75% within the next six months, the IMF claimed, the Reserve Bank of Australia (RBA) risked trapping the Australian economy in a cycle of low growth and weak inflation.
New Zealand Dollar (NZD)
There was little domestic news or data released yesterday for New Zealand. Consequently, the ‘Kiwi’ was unable to hold onto opening levels and spent the day weakening. What little data there was available was positive, with January retail card spending increasing 2.7% month-on-month; 2% above forecast. Annualised spending rose 2.5%. But these low-impact figures weren’t sufficient to prevent the New Zealand Dollar from declining.
Canadian Dollar (CAD)
The Canadian Dollar saw mixed movement yesterday. Oil markets were slumping in the face of an advancing US Dollar, but investors also had reasons to be cheerful. Prime Minister Justin Trudeau met with US President Donald Trump to discuss, amongst other things, the trade relationship between Canada and the US. This talk promised to set the tone for future debates, so investors were hoping that Trudeau would be able to court favour with the anti-free trade Republican and protect his economy from the shock that would come were tariffs to be imposed on Canadian exports to the US.