Reduced Risk of BoE Action Buoys Pound (GBP) Exchange Rates
The Pound returned to a positive footing yesterday as markets were less concerned that the Bank of England (BoE) will deliver an emergency interest rate cut.
Speculation over the upcoming UK budget also helped to shore up GBP exchange rates, with markets hopeful that fiscal stimulus measures could be on the cards. A smaller yearly decline in new car sales also helped keep a floor under the Pound.
A lack of UK data will put Brexit back in the spotlight today.
Euro (EUR) Boosted by Surging German Factory Orders
A solid improvement in February’s German construction PMI offered some support to the Euro yesterday, and the common currency extended gains this morning after factory orders data also impressed.
German factory orders came in at 1.4% on the year rather than the -5.4% forecast.
The data has left the Euro trading higher against the Pound and US Dollar.
Weak Factory Orders Weigh on US Dollar (USD)
The mood towards the US Dollar soured yesterday as January’s US factory orders data showed a modest -0.1% contraction on the month.
This decline was another sign of the negative impact of slowing global trade on the world’s largest economy. With markets wary that the Federal Reserve will cut interest rates further in the months ahead, USD exchange rates were left biased to the downside.
If today’s non-farm payrolls report disappoints the US Dollar could slip further before the weekend.
Proposed OPEC Production Cut Fails to Boost Canadian Dollar (CAD)
The Canadian Dollar failed to benefit from the Organisation of Petroleum Exporting Countries (OPEC) proposal to cut production in response to slowing global growth.
With the cuts unlikely to kick in for some months, and not yet agreed with allies like Russia, analysts doubt the likely impact of the move.
Forecasts point towards an uptick in February’s Canadian unemployment rate so CAD exchange rates may trend lower heading into the weekend.
Disappointing Retail Sales Weaken Australian Dollar (AUD) Exchange Rates
The Australian Dollar (AUD) came under pressure yesterday as Australian trade data disappointed, and the currency extended losses overnight.
Australia’s retail sales report was expected to show a stagnation in consumer spending in January, following December’s -0.5% slump. However, sales growth actually declined by -0.3% month-on-month.
New Zealand Dollar (NZD) Slides in Quiet Data Week
The ‘Kiwi’ edged lower before the weekend as the spread of Covid-19 encouraged a risk-off environment.
A lack of economic data for New Zealand has limited NZD’s potential for gains this week, but next week’s manufacturing and retail sales reports could inspire movement.