Aussie drops below 0.71 after better than expected US numbers
Friday 1 March, 2019
Daily Currency UpdateThe Aussie oscillated within a narrow range for much of yesterday’s Asian session before succumbing to market-moving news overnight. Opening this morning at 0.7094, the Aussie felt the impact of stronger than expected US data that ultimately undermined the Australian dollars valuations.
The day started positively for the Australian Dollar which enjoyed a boost after stronger than expected Capex numbers at home. Unfortunately, however, the boost proved temporary with US GDP for the fourth quarter and an inflation reading both beating expectations. The bullish news in the United States, saw the Aussie drop 0.6% to below 0.71.
Moving into the close of the week, the Aussie now looks to a speech from Fed Chair Powell and Chinese PMI numbers for direction.
Key MoversThe New Zealand Dollar has continued to weaken on Thursday on the back of weak local business confidence data. The ANZ business confidence index dropped from -24.1 in January to -30.9 in February, continuing to indicate that business is cautious about the outlook. Adding fuel to an already soft Kiwi was weak Chinese data and upbeat US data. The NZD/USD met support at 0.6800 and has since settled around 0.6807.
Looking ahead we have Building Consents and the Overseas Trade Index due.
On the technical front, the first line of support sits at 0.6800 followed by 0.6750, on the upside resistance is at 0.6840 and 0.6880.
The Pound Sterling edged lower on Thursday on the back of continued uncertainty about when Britain will exit the European Union and on what terms. The GBP/USD pair retreated from its 7-month high of 1.3349 and settled at around 1.3270, as the dollar found support in better-than-expected GDP figures.
On the release front today, a fairly quiet day ahead in the UK, with the only release February Manufacturing PMI expected at 52.0 vs. January's reading of 52.8.
From a technical perspective, the GBP/USD pair is currently trading at 1.3260. We continue to expect support to hold on moves approaching 1.3240 while now any upward push will likely meet resistance around 1.3315.
The Greenback is stronger this morning after U.S. data showed growth in the world’s largest economy was stronger than expected in the fourth quarter. U.S. gross domestic product increased at a 2.6 percent annualised rate in the fourth quarter after expanding at a 3.4 percent pace in the July-September period. Economists had been expecting growth of just 2.3 percent. The economy overall grew 2.9 percent in 2018, the best performance since 2015, and better than the 2.2 percent in 2017.
On the release front today in the US we will see February Market Manufacturing PMI and December income and spending data.
From a technical perspective, the Greenback is stronger this morning against the Australian dollar trading at 0.7092. We continue to expect support to hold on moves approaching 0.7080 while now any upward push will likely meet resistance around 0.7170. The New Zealand dollar also fell against the Greenback down 0.54 percent to 0.6804.
The Euro slipped against the US dollar yesterday amidst strong data releases for the US. The Euro did enjoy some temporary gains yesterday afternoon after French, German, Spanish and Italian releases all came back higher than it’s expected forecast.
We can expect some volatility tonight as the Purchasing Managers’ Index data for France, Italy, Germany, Spain are all being released. Eurostat will also be releasing their data on the CPI Flash Estimate, showing the change in the price of goods and services purchased by consumers. As consumer prices account for a majority of overall inflation, these releases are a major indicator of economic health and expected to have a major impact on the Euro.
The Euro opened at 1.1378 against the USD this morning.
The Loonie rallied to 1.3207 in the early North American session but failed to push any higher and gave up all gains pulling back down to 1.3160 at the time of writing.
Statistics Canada announced that the Industrial Product Price Index (IPPI) fell 0.3% in January to post its third straight decline. Additionally, the current account deficit rose to 15.48 billion CAD in Q4 from 10.11 billion CAD.
Looking ahead, today sees the release of fourth-quarter GDP. The economy contracted 0.1% in November, its second decline in three months. Another soft reading is expected in December, with a forecast of 0.0%. Also, we have a Manufacturing PMI. The indicator continues to post scores above the 50-level, pointing to contraction. Still, the indicator has slowed in the past two readings, raising concerns about the strength of the manufacturing sector.
- AUD/NZD: 1.0373 - 1.469 ▲
- GBP/AUD: 1.8584 - 1.8714 ▲
- AUD/USD: 0.7039 - 0.7188 ▼
- AUD/EUR: 0.6179 - 0.6370 ▼
- AUD/CAD: 0.9311 - 0.9515 ▲