US Dollar Extends Gains After US GDP Revised Higher

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Headlines

  • Australian Dollar Lacked Direction in Absence of Data – Stronger private sector credit may boost AUD exchange rates today
  • EUR Exchange Rate Rally Forecast on German Inflation and Unemployment Data – Rising inflationary pressure should support Euro
  • US Gross Domestic Product Saw Surprise Upward Revision – US Dollar remains on bullish run in spite of lingering trade concerns
  • Stronger ANZ Activity Outlook Failed to Encourage ‘Kiwi’ Gains – Risk aversion limits scope for NZD demand

Australian Dollar

AUD exchange rates continued to lack any particular direction on Wednesday, with an absence of domestic data limiting investor demand. As markets remained relatively jittery over the prospect of the US imposing further trade measures against China the appeal of the risk-sensitive Australian Dollar was naturally rather muted. With the US Dollar regaining further ground this added to the downside bias of the ‘Aussie’.

However, support could be in store for AUD exchange rates this morning if February’s private sector credit data points towards a greater level of confidence within the Australian economy.

Sterling

Investors were not impressed to find that the CBI reported retail sales index for March had unexpectedly slumped from 8 to -8. While this weakness was partially attributable to the severe weather disruption seen in recent weeks the decline still put renewed pressure on the Pound. The decline raised fresh concerns over the relative health of domestic consumer spending, which has been a key factor in driving economic growth in the wake of the Brexit vote.

Any change in the latest UK net consumer credit figure may provoke additional volatility for GBP exchange rates this afternoon.

Euro

Although the German GfK consumer confidence index showed a surprise improvement on the month this failed to offer particular encouragement to the single currency. While S&P Global Ratings maintained a rather optimistic note on the Eurozone economy in its latest report the Euro still struggled to find traction against many of the majors. With signs suggesting that economic growth has peaked investors saw little reason to pile into the Euro at this stage.

Even so, German unemployment rate and consumer price index results are forecast to give EUR exchange rates a rallying point today, with both expected to show improvement.

US Dollar

While the US advance goods trade deficit did not narrow as forecast in February demand for the US Dollar remained robust. An unexpectedly sharp upward revision to the fourth quarter annualised gross domestic product helped to overshadow the weaker goods data, with the world’s largest economy clocking growth of 2.9%. Even though concerns remain over the state of trade relations between the US and China this was not enough to temper the appeal of the US Dollar.

A similarly positive showing from tonight’s personal consumption expenditure data could see USD exchange rates extending their bullish run further.

Canadian Dollar

As US crude oil inventories showed a build-up on the week this prompted a fresh decline in the oil market. However, this failed to push the Canadian Dollar lower across the board during Wednesday’s European session, in large part due to the relative weakness of its rivals. With investors beginning to adopt positions ahead of the latest Canadian gross domestic product data the volatility of CAD exchange rates was somewhat limited.

Should growth slip on the year as forecast, though, the Canadian Dollar can be expected to return to a rather softer state.

New Zealand Dollar

Confidence in the ‘Kiwi’ did not improve on the back of March’s ANZ activity outlook index, in spite of the measure pushing higher on the month. As business confidence remained distinctly negative the New Zealand Dollar saw little in the way of support, with investors still doubtful over the underlying health of the domestic economy. With markets in a more risk-averse mood NZD exchange rates lacked much in the way of support yesterday.

Further signs of weakness within the New Zealand housing sector would likely keep the ‘Kiwi’ under pressure ahead of the Easter weekend.

Data Released

March 29th 07:45 NZD Building Permits (MoM) (FEB)
March 29th 10:30 AUD Private Sector Credit (YoY) (FEB) 4.9%
March 29th 17:55 EUR German Unemployment Rate (MAR) 5.3%
March 29th 18:30 GBP Net Consumer Credit (FEB) 1.4 billion
March 29th 22:00 EUR German Consumer Price Index (YoY) (MAR P) 1.7%
March 29th 22:30 CAD Gross Domestic Product (YoY) (JAN) 2.9%
March 29th 22:30 USD Personal Consumption Expenditure Core (YoY) (FEB) 1.6%

Post by TorFX

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