Bullish Jobless Claims Data Boosts US Dollar

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  • AUD Exchange Rates Soften as Consumer Inflation Expectations Ease – Cautious RBA commentary to keep Australian Dollar under pressure
  • Latest Brexit Deadline Extension Fails to Benefit Pound – Uncertainty set to hang over UK economy for foreseeable future
  • US Dollar Strengthens as Initial Jobless Claims Hit Lowest Level Since 1969 – Signs continue to point towards tightening labour market
  • Easing Food Price Index Weighs on New Zealand Dollar – Solid manufacturing PMI could offer NZD exchange rate rally

Weaker Inflation Expectations Dent Australian Dollar

The mood towards the Australian Dollar soured yesterday as April’s consumer inflation expectations survey proved discouraging. As expectations eased from 4.1% to 3.9% this left AUD exchange rates on a weaker footing, with confidence in the inflationary outlook diminishing. With the path of inflation appearing weaker the case for greater Reserve Bank of Australia (RBA) caution picked up, to the detriment of the Australian Dollar.

Any signs of dovishness in this morning’s RBA Financial Stability Review could see AUD exchange rates shedding further ground ahead of the weekend.

Extended Brexit Deadline Unable to Shore up Pound

As Theresa May secured a fresh extension of the Brexit deadline the downside pressure on GBP exchange rates eased last night. However, the positive impact on the Pound was ultimately limited thanks to investor disappointment that the extension is only until the end of October. There are concerns that a prolonged period of uncertainty could weigh heavily on the UK economy, with the risk of a no-deal Brexit still not entirely dispelled.

Without signs of progress towards an agreement among MPs the mood towards the Pound is unlikely to see any particular improvement in the near term.

Euro Muted as German Inflation Eases

Confirmation that the German consumer price index eased to 1.3% on the year in March left the Euro with limited support. With the European Central Bank (ECB) looking set to maintain a dovish policy outlook throughout the rest of the year this soft inflation data gave investors no cause for confidence. The latest International Monetary Fund (IMF) warning over the global growth outlook also put pressure on EUR exchange rates overnight.

A weaker month of Eurozone industrial production could see the Euro extending its losses this evening.

US Dollar Strengthens as Initial Jobless Claims Fall to 50-Year Low

US jobless claims data proved encouraging last night as initial claims fell to their lowest level since 1969. With signs pointing towards a continued tightening of the US labour market the appeal of the US Dollar naturally improved. While this is unlikely to convince Federal Reserve policymakers to adopt a more hawkish outlook in the months ahead the positive data still shored up USD exchange rates.

As forecasts point towards a steady University of Michigan consumer sentiment index the US Dollar could remain on a solid footing tonight.

Housing Price Index Rebound Fails to Boost Canadian Dollar

February’s new housing price index rebounded as forecast, strengthening 0.1% on the year. This suggests that the Canadian housing market is in a stronger state of health, in spite of wider concerns over the economic outlook. Even so, as market risk appetite eased in the face of the latest words of caution from the IMF the Canadian Dollar failed to benefit from this improvement.

Without the support of domestic data CAD exchange rates could struggle to return to a positive footing in the near term.

Easing Food Price Index Weighs on New Zealand Dollar

March’s food price index failed to encourage NZD exchange rates, with the index easing from 1.7% to 1.2% on the year. As signs point towards inflationary pressure remaining muted in the months ahead the risk of a Reserve Bank of New Zealand (RBNZ) interest rate cut persists. Coupled with a decline in market risk appetite this left the New Zealand Dollar on a weaker footing yesterday.

However, NZD exchange rates could find a rallying point this morning with forecasts pointing towards another month of solid growth from the manufacturing PMI.

Data Releases

April 12th 08:30    NZD    Manufacturing PMI (MAR)    54.4
April 12th 11:30    AUD    Reserve Bank of Australia Financial Stability Review    
April 12th 19:00    EUR    Eurozone Industrial Production (YoY) (FEB)    -1.0%
April 13th 00:00    USD    University of Michigan Consumer Sentiment Index (APR)    98.3

Post by TorFX

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