Canadian Dollar Pushes Higher as Oil Hits US$72 Per Barrel

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Headlines

  • RBA Governor Lowe Reiterated That Next Interest Rate Move to be Up – Australian Dollar struggles to find support
  • Weaker-Than-Forecast UK GDP Estimate Weighed on Pound Outlook – BoE surveys in focus today
  • CAD Exchange Rates Supported as Oil Prices Continued Bullish Run – Canadian Dollar looks vulnerable to any market shifts
  • Lack of Guidance from ECB President Draghi Muted Euro Appeal – Odds of return to monetary tightening bias remain limited

Australian Dollar

While Reserve Bank of Australia (RBA) Governor Philip Lowe reiterated that the next interest rate move is almost certain to be up this did not give the Australian Dollar (AUD) any particular encouragement. As the central bank looks set to remain on hold for the foreseeable future the comments ultimately had little impact on AUD exchange rates. Anticipation ahead of the latest Federal Reserve meeting minutes also weighed on the appeal of the antipodean currency.

Any improvement in April’s consumer inflation expectation reading may encourage the Australian Dollar to recover some ground, however.

Sterling

GBP exchange rates saw some volatile movement during Wednesday’s European session, in large part thanks to the mixed nature of the latest raft of UK data. While the visible trade deficit narrowed further than forecast this was counterbalanced by the disappointing nature of February’s industrial production and construction output figures. The Pound saw further jitters on the back of the NIESR gross domestic product estimate for the three months to March, which clocked in at just 0.2%.

Even so, a more upbeat tone in the Bank of England’s (BoE) first quarter credit conditions and bank liabilities surveys could see Sterling push higher across the board.

Euro

Ultimately, European Central Bank (ECB) President Mario Draghi failed to encourage any particular demand for the Euro. A lack of fresh commentary on monetary policy limited the impact of Draghi’s speech, with markets seeing little reason to reassess the odds of any imminent ECB shift towards hawkishness. As policy divergence between the ECB and Fed looks set to widen over the coming months EUR exchange rates struggled to find any particular traction.

The Euro is likely to remain on the back foot today if the March ECB meeting minutes prove similarly lacklustre.

US Dollar

Although the headline US consumer price index ticked higher on the year, accelerating from 2.2% to 2.4%, the US Dollar struggled to capitalise on this positive showing. USD exchange rates remained under some degree of pressure ahead of the release of the Federal Open Market Committee’s (FOMC) March meeting minutes. While investors are still hopeful that the Fed could adopt a more aggressive pace of monetary tightening over the course of 2018 the upside potential of the US Dollar was limited.

Signs of a tightening labour market in tonight’s US jobless claims figures may boost the appeal of the US Dollar.

Canadian Dollar

With Brent crude trending above US$72 per barrel the commodity-correlated Canadian Dollar continued to benefit. However, this resurgence in oil prices looks rather vulnerable given lingering geopolitical tensions and concerns over US production. Profit taking could well see CAD exchange rates return to a downtrend in the near term.

Even so, another solid showing from the new housing price index may help the Canadian Dollar to find fresh momentum tonight.

New Zealand Dollar

A modest contraction in the ANZ truckometer put New Zealand Dollar exchange rates under fresh pressure. As inflationary pressure within the New Zealand economy refuses to materialise the chances of any shift in the Reserve Bank of New Zealand’s (RBNZ) outlook remain slim. With market risk appetite somewhat limited yesterday there was little to support NZD exchange rates.

A rebound in retail card spending on the month could offer the New Zealand Dollar a chance to rally, though.

Data Released

April 12th 08:45 NZD Retail Card Spending (MoM) (MAR) 0.5%
April 12th 11:00 AUD Consumer Inflation Expectation (APR)
April 12th 18:30 GBP Bank of England Credit Conditions and Bank Liabilities Surveys
April 12th 21:30 EUR European Central Bank Meeting Minutes
April 12th 22:30 CAD New Housing Price Index (YoY) (FEB)
April 12th 22:30 USD Initial Jobless Claims (APR 7) 230,000

Post by TorFX

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