Trade Data Strengthens New Zealand Dollar Ahead of RBNZ Meeting

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  • Australian Dollar Shakes Off Underwhelming Consumer Confidence Index – AUD exchange rates remain vulnerable to fears of global slowdown
  • Surprise Trade Surplus Shores up New Zealand Dollar – Signs of RBNZ dovishness could dent NZD today
  • US Dollar Trends Lower on Consumer Confidence Miss – Markets continue to fret over potential recession
  • Brexit-Based Uncertainty Continues to Limit Pound Strength – UK mortgage approvals sink to multi-year low

Easing Confidence Fails to Prevent Australian Dollar Gains

While the ANZ Roy Morgan weekly consumer confidence index failed to show an improvement this was not enough to prevent the Australian Dollar gaining ground. Even as worries over the global growth outlook persisted, with the risk of a US recession appearing to rise, the mood towards the antipodean currency nevertheless improved. The underwhelming nature of last night’s US data offered additional encouragement to AUD exchange rates, meanwhile.

As long as signs continue to point towards a global slowdown, though, support for the Australian Dollar could easily prove short-lived.

Pound Muted as Mortgage Approvals Hit Six-Year Low

Contrary to expectations UK mortgage approvals fell to a near-six-year low in February, raising fresh concerns over the underlying health of the domestic economy. With fewer mortgage approvals suggesting an increased sense of caution amongst households and lenders the appeal of the Pound was limited. Although reports suggested that support for Theresa May’s rejected Brexit plan was increasing among Conservative MPs this failed to boost GBP exchange rates for long.

An uptick in tonight’s CBI reported retail sales index could offer investors greater cause for confidence in the economic outlook, however.

Weak German and French Confidence Weighs on Euro

EUR exchange rates came under fresh pressure as the German GfK consumer confidence index missed expectations in April. As the index dipped from 10.7 to 10.4 this undermined the impact of Monday’s improved German business sentiment survey. French confidence data also proved disappointing, indicating that sentiment across the Eurozone remains muted in the face of global trade tensions and political uncertainty.

Comments from European Central Bank (ECB) President Mario Draghi could see the single currency shed further ground today, with markets sensitive to any fresh signs of dovishness.

Surprise Consumer Confidence Decline Drags US Dollar Down

In another blow to confidence in the US economy March’s consumer confidence index saw a surprise decline, falling from 131.4 to 124.1 on the month. This decline was accompanied by a sharp deterioration in the Richmond Fed manufacturing index, exacerbating market worries over the prospect of a potential US recession. With the world’s largest economy looking set to remain under pressure in the near future investors saw little incentive to favour the US Dollar over its rivals.

Even so, a narrowing of the US trade deficit could offer USD exchange rates encouragement overnight.

Rising Oil Prices and Market Optimism Buoy Canadian Dollar

The Canadian Dollar saw little volatility yesterday in the absence of any fresh domestic data, instead benefitting from the relative weakness of the US Dollar. While worries over the health of the Canadian economy remain CAD exchange rates were able to push higher across the board last night, in spite of signs of a slowing global economy. A fresh rally in oil prices helped to shore up the Canadian Dollar further.

If US crude oil inventories show a fresh decline on the week this could see CAD exchange rates return to a bullish trend tonight.

New Zealand Dollar Strengthens on Surprise Trade Surplus

February’s New Zealand trade data offered investors cause for confidence yesterday, showing a surprise return to a state of surplus. As export volumes strengthened further than forecast this helped to swell the trade balance, resulting in a modest surplus of 12 million. Although this was not enough to outweigh the previous month’s large deficit this still offered NZD exchange rates encouragement.

The mood towards the New Zealand Dollar could sour today, though, if the Reserve Bank of New Zealand (RBNZ) shows signs of increased dovishness at its March policy meeting.

Data Releases

March 27th 12:00    NZD    Reserve Bank of New Zealand Rate Decision    1.75%
March 27th 19:00    EUR    European Central Bank President Mario Draghi Speaks    
March 27th 22:00    GBP    CBI Reported Retail Sales (MAR)    5
March 27th 23:30    USD    Trade Balance (JAN)    -57.5 billion

Post by TorFX

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