Stronger Lending Data Shores up Australian Dollar

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  • Uptick in Home Loans and Investment Lending Drive Australian Dollar Boost – AUD exchange rates vulnerable to weaker consumer confidence index
  • Speculation over Brexit Deadline Extension Weighs on Pound – Stagnant gross domestic product to add to bearishness today
  • Threat of US Trade Tariffs Fails to Weaken Euro – European Central Bank dovishness set to drag on single currency
  • Underwhelming Small Business Optimism Limits US Dollar Demand – Confidence in US economic outlook remains muted

Domestic Lending Rebound Boosts Australian Dollar

A stronger-than-expected rebound in Australian home loans and investment lending in February encouraged AUD exchange rates to trend higher yesterday. Investors took heart from signs that businesses and individual households are showing a greater degree of confidence. Although global trade tensions showed fresh signs of picking up this was not enough to prevent the Australian Dollar making solid gains over the course of the day.

However, another month of weakness from the Westpac consumer confidence index could see AUD exchange rates come under renewed pressure this morning.

Brexit Uncertainty Limits Pound Appeal

Speculation surrounding Brexit continued to drive the mood towards the Pound overnight as Theresa May discussed the possibility of a further extension of the deadline with EU leaders. Although support for a short extension, as proposed by May, proved limited markets remain hopeful that the UK will not crash out of the EU without a deal on Friday. Even so, GBP exchange rates struggled to find any particular traction as the sense of political uncertainty persisted.

If the UK economy stagnated in February as forecast the Pound is likely to shed further ground today.

Euro Shrugs Off Threat of US Tariffs

While the Trump administration threatened to impose a fresh $11 billion worth of tariffs on EU produce this ultimately failed to weigh on the Euro. As the proposed tariffs would not be implemented until after the World Trade Organisation (WTO) offers its ruling on controversial Airbus subsidies this limited the impact of the news. As February’s Italian retail sales data bettered forecasts, clocking in at growth of 0.9% on the year, this offered additional support to the single currency.

EUR exchange rates look vulnerable, however, ahead of tonight’s European Central Bank (ECB) policy announcement, with investors wary of any fresh signs of dovishness.

US Dollar Falters as Small Business Optimism Disappoints Forecasts

As the NFIB small business optimism index failed to strengthen as far as forecast on the month, only picking up from 101.7 to 101.8, this left the US Dollar on a weaker footing. Confidence in the outlook of the world’s largest economy deteriorated further on the back of the data. With businesses increasingly feeling the impact of recent trade tensions investors were disappointed by the latest flaring up of tensions between the US and EU.

The US Dollar could find a boost overnight, however, if March’s consumer price index data strengthens as anticipated.

Oil Bullishness Fails to Sustain Canadian Dollar Uptrend

Support for the Canadian Dollar faltered somewhat last night as oil prices lost their earlier momentum. Although Norway stepped back from plans for exploratory drilling in the Artic, limiting future oil supplies, this was not enough to give the oil market a fresh boost. Increased global trade tensions also put a dampener on CAD exchange rates, meanwhile.

If US crude oil inventories show another increase on the week this could see the Canadian Dollar come under even greater pressure tonight.

Economic Activity Contraction Limits NZD Exchange Rate Strength

A sharp contraction in March’s ANZ truckometer reading limited the appeal of the New Zealand Dollar, pointing towards weaker growth momentum. With economic activity showing fresh signs of slowing confidence in the domestic outlook naturally weakened, leaving NZD exchange rates exposed to fresh selling pressure. Even so, market risk appetite helped to limit the data’s negative impact on the New Zealand Dollar.

The mood towards the New Zealand Dollar could sour further over the course of the day, though, in the absence of any fresh domestic data.

Data Releases

April 10th 10:30    AUD    Westpac Consumer Confidence (APR)    -1.8%
April 10th 18:30    GBP    Gross Domestic Product (MoM) (FEB)    0.0%
April 10th 21:45    EUR    European Central Bank Rate Decision    0.0%
April 10th 22:30    USD    Consumer Price Index (YoY) (MAR)    1.8%

Post by TorFX

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