- Turnbull Government Lost Thirtieth Consecutive Opinion Poll – Australian Dollar softens on political worries
- Sharp Contraction in German Exports Weighed on Euro – EUR exchange rates to remain muted ahead of ECB commentary
- USD Exchange Rates Softened Under Lingering Trade War Fears – Markets await latest ECB commentary
- Stronger House Prices Supported Pound Demand – Clouds still hang over domestic outlook ahead of Brexit
In spite of a solid uptick in the Australian construction PMI the mood towards the ‘Aussie’ remained somewhat muted on Monday. Investors were unimpressed by news that Prime Minister Malcolm Turnbull’s coalition government had lost another major opinion poll. As this was the thirtieth straight loss confidence in the future of the Turnbull government naturally declined, to the detriment of the Australian Dollar.
Unless the NAB business confidence index shows an improvement on the month AUD exchange rates are likely to remain under a degree of pressure today.
Investors were surprised to find that the Halifax house price index had surged in the three months to March, with prices accelerating 2.7% on the year. This suggests that the UK housing market is in a stronger state of health than previously thought, giving the Pound fresh cause for confidence. However, as the underlying details of the report were not entirely positive Sterling still struggled against some of its stronger rivals.
As forecasts point towards a slight contraction in the BRC like-for-like sales index the Pound could see its strength further eroded this afternoon.
While the German trade surplus widened in February the month’s trade data proved rather discouraging for EUR exchange rates. An unexpected -3.2% contraction in exports on the month undermined optimism in the outlook of the Eurozone’s powerhouse economy, adding to evidence that the currency union has lost momentum since the start of the year. Demand for the Euro softened in the wake of the data, especially as the latest Eurozone investor confidence index also fell short of forecast.
Commentary from European Central Bank (ECB) policymakers will be the major focus of market attention this week.
Speculation over the Trump administration’s approach to trade continued to drag on the US Dollar overnight. While markets had been encouraged by signs that the US could be taking a more conciliatory approach over the weekend this ultimately proved to be short-lived. With the threat of fresh tariffs still having over proceedings the threat of a US-China trade war persists, keeping USD exchange rates under pressure for the time being.
Any weakening of the NFIB small business optimism index is likely to add to the downside bias of USD exchange rates.
As fears over the future of NAFTA continued to diminish this helped to shore up the Canadian Dollar, even though no formal deal is likely to be announced imminently. Oil prices pushed higher, meanwhile, thanks to escalating geopolitical tensions. The first quarter Bank of Canada (BOC) business outlook survey proved a little less encouraging, even though the measure showed an uptick of 2%.
Weaker housing data, however, could see CAD exchange rates return to the back foot tonight.
New Zealand Dollar
A persistent absence of fresh domestic data did not hamper the New Zealand Dollar yesterday, with the risk-sensitive ‘Kiwi’ pushing higher across the board. This was largely thanks to the relative weakness of the US Dollar, with markets inclined to pile into higher-yielding assets instead.
As long as market risk appetite holds up today the New Zealand Dollar is likely to remain on a generally positive footing.
April 10th 09:01 GBP BRC Like-For-Like Sales (YoY) (MAR) -0.1%
April 10th 11:30 AUD NAB Business Confidence (MAR)
April 10th 20:00 USD NFIB Small Business Optimism (MAR) 107
April 10th 22:15 CAD Housing Starts (MAR) 218,000
Post by TorFX