Bullish Oil Prices Shore up Canadian Dollar

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  • Australian Dollar Strengthens on Hopes of Imminent US-China Trade Breakthrough – Rebound in Australian home loans set to boost AUD exchange rates
  • Pound Softens as Brexit Deadline Draws Closer – Markets anxious for signs of progress
  • German Export Contraction Limits Euro Demand – Single currency upside muted ahead of ECB meeting
  • Canadian Dollar Strengthens as Oil Prices Hit Five-Month High – Weak building permits data points towards domestic weakness

Hopes of US-China Trade Progress Boost Australian Dollar

As markets continued to bet on the likelihood of an imminent breakthrough in US-China trade talks this helped to shore up the Australian Dollar. The prospect of an easing in global trade tensions kept AUD exchange rates on a positive footing yesterday, even in the absence of any fresh domestic data. Underwhelming US data also offered a boost to the Australian Dollar, with economic weakness likely to keep the Federal Reserve on a neutral policy bias.

With forecasts pointing towards a modest rebound in home loans on the month AUD exchange rates could find a stronger rallying point this morning.

Anxiety Over Brexit Deadline Keeps Pound Under Pressure

Confidence in the Pound remained limited as Theresa May flew to Brussels for fresh meetings with EU leaders. With no extension to Friday’s Brexit deadline yet agreed investors remain wary of the prospect of the UK crashing out of the EU without a deal. Although reports suggest progress towards a compromise between May and the Labour leadership this was not enough to shore up GBP exchange rates yesterday.

Another month of contraction in the BRC like-for-like sales data could prompt further selling of the Pound.

Euro Appeal Limited as German Exports Contract

German trade data proved disappointing as exports unexpectedly contracted -1.3% in February, reflecting the weakened trading position of the Eurozone’s powerhouse economy. Although imports also saw a decline on the month this failed to encourage any particular degree of confidence in the economic outlook. However, the mood towards the Euro still improved as the Eurozone Sentix investor confidence index strengthened from -2.2 to just -0.3 this month.

Even though sentiment among investors is picking up, however, EUR exchange rates remain vulnerable to pressure ahead of this week’s European Central Bank (ECB) policy announcement.

Weaker Factory Orders Weigh on US Dollar

February’s US factory orders fell -0.5% on the month, raising fresh concerns over the underlying strength of the manufacturing sector. With confidence in the outlook of the US economy already diminished this left the US Dollar on a weaker footing against its rivals. A general uptick in market risk appetite also weighed on USD exchange rates, with markets cheered by the prospect of an imminent US-China trade agreement.

If tonight’s NFIB small business optimism index improves as forecast this should offer the US Dollar a rallying point.

Canadian Dollar Benefits as Oil Hits Five-Month High

As Brent crude broke back above the US$70 per barrel mark at the start of the week this boosted the Canadian Dollar across the board. The commodity-correlated currency benefited as oil prices reached a five-month high, boosted by the disruption of Libyan oil supplies. This helped to overshadow another month of weak Canadian building permit approvals, with the -5.7% contraction pointing towards a weaker construction sector and appetite for housing.

As long as oil markets remain in a bullish mood this should keep the Canadian Dollar on a stronger footing against its rivals.

Risk Appetite Shores up New Zealand Dollar

Market risk appetite offered support to the New Zealand Dollar yesterday, even in the absence of any fresh domestic data. With the US Dollar on the back foot and market trade tensions showing signs of easing the downside potential of NZD exchange rates was limited. However, the New Zealand Dollar still lost out to its risk-sensitive cousins.

Signs of stronger economic growth in New Zealand could give NZD exchange rates a fresh boost today if the ANZ truckometer prints positively.

Data Releases

April 9th 08:00    NZD    ANZ Truckometer (MoM) (MAR)    
April 9th 09:01    GBP    BRC Like-for-Like Sales (YoY) (MAR)    -0.9%
April 9th 11:30    AUD    Home Loans (MoM) (FEB)    0.5%
April 9th 20:00    USD    NFIB Small Business Optimism (MAR)    102

Post by TorFX

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