The British pound remains range-bound in the Thursday session. Currently, GDP/USD is trading at 1.3977, up 0.16% on the day. Construction sector rebounds The UK construction industry accelerated in February with a PMI read of 53.3, up sharply from 49.2. The 50-level separates contraction from expansion, so construction is again showing growth. This is a result of new construction projects in anticipation of stronger economic conditions over the course of the year. February PMIs are pointing to the economy gathering steam, which should be a bullish sign for the British pound. The Manufacturing PMI rose to 55.1, slightly above the estimate of 54.9. The services sector also improved, with the PMI climbing to 49.5, up sharply from 39.5 beforehand. The national lockdown has resulted in pent-up demand, and with the government … [Read More...]
AUD steady as retail sales hit expectations
The Australian dollar has recorded slight gains in the Thursday session. Currently, the pair is trading at 0.7790, up 0.23% on the day. Australia retail sales stable Retail sales climbed 0.5% in January, which followed the December gain of 0.6%. These are by no means earth-shattering numbers, but the two consecutive gains are welcome news after back-to-back declines of around 4 per cent. The small gains point to consumer spending stabilizing and with the recovery gaining steam, we can expect better numbers in the coming months. It has been a busy week on the fundamental side, with a host of Australian indicators. The highlights have been the RBA policy meeting and a strong GDP report. The RBA left interest rates at the ultra-low level of 0.10… [Read More...]
CAD flexes muscles on OPEC+ shocker
Canadian dollar piggybacks on higher crude prices The Canadian dollar has posted gains in Thursday’s North American session. Currently, USD/CAD is trading at 1.2633, down 0.15% on the day. The Canadian dollar has shown sharp gains today, as investors have snapped up the currency following a surprise OPEC announcement which sent oil prices sharply higher. Canada is a major oil producer, and the significant boost in oil prices is excellent news for the Canadian economy. Earlier in the day, USD/CAD fell as low as 1.2557, its lowest level since February 25. Oil prices jump as OPEC extends cuts There has been a stunning development at the OPEC+ meeting, attended by OPEC members as well as Russia. OPEC+ announced that it would not hike output in April by 500 … [Read More...]
Higher US yields send Aussie sliding
Australian dollar falls below 78 line What a difference one short day can make in the currency markets. It was just yesterday that the red-hot Australian dollar crossed above the 80-level for the first time since February 2018. The Aussie was once again treating its US counterpart as a punching bag, posting impressive gains of 4.3% in the month of February. The US dollar index has been weakening, and on Thursday the index fell below 90, an important support level in recent weeks. This drop could have signaled that the US dollar was headed even lower. However, a sharp rise in US bond yields has triggered a dramatic turnaround for the US dollar. The 10-year yield rose as high as 1.61% on Thursday, its highest level since February 2020. The … [Read More...]
Euro drifting as Powell talks dovish
The euro is unchanged in the European session. Currently, EUR/USD is trading at 1.2154, up 0.02% on the day. German GDP posts small gain Germany is the eurozone’s largest economy and has traditionally been the locomotive that leads the bloc in economic growth. With the eurozone grappling with the devastating effect of the Covid pandemic, Germany is again being counted on to lift the eurozone to recovery. Germany’s GDP for Q4 of 2020 showed negligible growth, although the gain of 0.3% managed to beat the street estimate of 0.1%. This follows a sharp gain of 8.5% in Q2, although that reading came after a decline of -9.7% in the first quarter. With strict lockdowns in the eurozone keeping consumers at home and hampering their ability to … [Read More...]
Australian dollar flat
The Australian dollar is drifting for a second straight day. Currently, AUD/USD is trading at 0.7907, down 0.06% on the day. On the fundamental front, we’ll get a look at Australian Private Capital Expenditure (00:30 GMT). The indicator has managed only one gain in the past 10 quarters, but the forecast for Q4 of 2020 stands at 1.1%. If the forecast proves accurate, the Aussie could resume its upward swing. After posting sharp gains on Friday and Monday, the Aussie has taken a breather. The currency has benefited from the rotation of the US dollar into cyclical assets and has soared 3.58% in the month of February. Given this positive momentum and the drop in the dollar index close to 90, the Aussie could soon make a move towards … [Read More...]
NZ dollar pauses after huge gains
The New Zealand dollar has posted modest gains in the Thursday session. Currently, NZD/USD is trading at 0.7445, up 0.16% on the day. New Zealand dollar soars The New Zealand dollar exploded on Wednesday, rising 1.3 per cent. The currency shot up after Finance Minister Grant Robertson announced that the central bank (RBNZ) would be required to take into consideration government policies in its monetary policy decisions. The government has inserted a new clause in the RBNZ’s Monetary Policy Committee, which says that government policy is to “support more sustainable house prices” and “dampening investor demand for existing housing stock”. RBZN Governor strongly opposed this move last year, but it appears that the government’s concern over the housing bubble has led it to make … [Read More...]
Australian dollar flirting with 80
The Australian dollar has posted slight gains on Thursday. Currently, AUD/USD is trading at 0.7976, up 0.011% on the day. Australian dollar crosses into 80 territory The Australian dollar has been on a tear, racking up gains of 4.3% in the month of February. This culminated in a breach of the symbolic 0.80 level earlier in the day, a line that had not been breached since February 2018. Currency markets have resumed their rotation out of US dollars, and commodity currencies like the Australian dollar have been the main beneficiaries. On Thursday, the US dollar index dropped below the 90 level, which has been an important support line. This could signal further losses are ahead for the US dollar. The RBA is uneasy about the Aussie’s sharp gains and will … [Read More...]
Euro starts week with a yawn
The euro has posted small gains in the Monday session. Currently, EUR/USD is trading at 1.2127, down 0.11% on the day. German Business Climate improves German data started the week on a positive note. The Ifo Business Climate improved to 92.4 in February, up from an upwardly revised 90.3 in January. This beat the estimate of 90.5 and marked a 4-month high. The Ifo institute statement noted that the German economy is performing well despite the lockdown “mainly because of the strong industrial economy”. Germany’s Manufacturing PMIs have been well into expansionary territory, and the January read improved to 60.6, its highest level since January 2018. The strong Business Climate release follows last week’s ZEW Economic Sentiment index, which jumped from 58.3 to 69.6. This indicates that financial experts are more … [Read More...]
New Zealand dollar rally continues
The New Zealand dollar has kicked off the trading week with considerable gains. Currently, NZD/USD is trading at 0.7328, up o.46% on the day. New Zealand dollar continues hot streak NZD/USD posted sharp gains of 1.02 per cent on Friday, its highest one-day gain since early January. The kiwi took advantage of a drop in US yields as it rallied strongly. The currency has added to these gains on Monday, after S&P Global Ratings raised New Zealand’s sovereign rating to AA+ from AA. This upgrade is impressive, with S&P noting that it was the first rise in ratings it had given any country since Covid-19. The S&P note stated that New Zealand had recovered more quickly than other developed economies because … [Read More...]
Pound higher ahead of UK job numbers
The British pound continues to gain ground. Currently, GDP/USD is trading at 1.4047, up 0.27% on the day. The pound has posted two winning sessions and is again in positive territory on Tuesday. The currency has enjoyed an excellent February, with gains of 2.5 per cent. The UK releases key employment data on Tuesday (7:00 GMT). Unemployment claims fell to 7.0 thousand in December, after a sharp gain of 64.3 thousand beforehand. The estimate for January stands at 13.8 thousand. Wage growth has been accelerating over the past five months, improving to 3.6% in December. The upswing is projected to continue, with a forecast of 4.1%. At the same time, the unemployment rate has been rising and is expected to edge up from 5.0% to 5.1%. UK Retail Sales slide UK … [Read More...]
Aussie rises on solid job numbers
The Australian dollar has reversed directions in the Wednesday session. Currently, AUD/USD is trading at 0.7781, up 0.41% on the day. Australia job data within expectations Australia created 29.1 thousand jobs in January, just shy of the forecast of 30.2 thousand. The reading pleased investors, as the Australian dollar has posted gains today. Although within expectations, the reading points to a worrisome trend, as Employment Change has slowed for a third successive month. Back in October, the economy created 178.8 thousand jobs, but job creation has been slipping since then. At the same time, the unemployment rate has been steadily falling and came in at 6.4%, down from 6.6%. This beat the street consensus of 6.5%. With the Australian economy showing a V-shaped recovery from the downturn due to … [Read More...]
Japanese yen ticks higher
The Japanese yen has recorded slight gains for a second straight day. Currently, USD/JPY is trading at 105.68, down 0.18% on the day. The yen was down over 1 percent against the US dollar this week, but has managed to reverse directions. Much of the pair’s movement this week can be attributed to the movement of US Treasury bonds, as USD/JPY is particularly sensitive to US/Japan rate differentials. The rise in US yields, especially the 10-year bonds, has pushed the yen lower. However, with Treasuries currently moving sideways, the Japanese currency has been able to make up some ground. On Tuesday, the dollar pushed the yen above the 106 level for the first time since September 2020. If US yields resume their upward movement, the pair should … [Read More...]
Canada ADP jobs report plunges
The Canadian dollar is down slightly in the Thursday session. Currently, USD/CAD is trading at 1.2703, up 0.02% on the day. Loonie yawns as ADP nonfarm payrolls slides Canada’s ADP nonfarm payrolls report has managed just one gain over the past five months, pointing to weakness in the labor market. After a small decline in December of -28.8 thousand, January was a disaster, with the economy shedding some 231.2 thousand jobs. The ADP report comes after the official Stats Canada release two weeks ago (Employment Change), which came in at -212.8 thousand, its worst reading since April 2020, when the economy was largely shut down due to Covid-19. These releases point to significant weakness in Canada’s labor market. Still, investors did not pay all that much attention to the … [Read More...]
Canadian dollar hits 4-week high
The Canadian dollar has posted slight gains on Friday. Currently, USD/CAD is trading at 1.2646, down 0.24% on the day. Canadian dollar closes in on 1.26 line The Canadian dollar has been creeping higher since mid-week. Earlier in the day, USD/CAD dropped to a low of 1.2609, its lowest level in four weeks. The US dollar eased overnight, and the dollar index has dropped on Friday 0.38%, to 90.24. There is support at 90.00, and a daily close below this level would signal a downtrend for the US currency. Investors brace for soft retail sales Canada releases retail sales reports for December later in the day (13:30 GMT). The release follows US retail sales earlier this week, but the numbers are expected to be much worse. US retail sales … [Read More...]
Pound hits 1.40 despite soft UK retail sales
The British pound has posted small gains in the Friday session. Currently, GDP/USD is trading at 1.4000, up 0.18% on the day. Sterling rallies past 1.40 line The pound enjoyed an excellent Thursday, as GBP/USD climbed close to 1 percent. The pair has continued to move higher on Friday and breached the 1.40 level, a symbolic level that had held since April 2018. The dollar index has dropped on Friday 0.38%, to 90.24. There is support at 90.00, and a daily close below this level would signal a downtrend for the US currency. UK Retail Sales slide UK Retail Sales suffered a miserable start to the year, with a read of -8.2% for January. This was the second decline in three months and the weakest reading since April. This sharp decline resulted … [Read More...]
RBA says indicate support to continue
The Australian dollar is unchanged in the Tuesday session. Currently, AUD/USD is trading at 0.7782, up 0.03% on the day. RBA minutes indicate QE will be prolonged There were no surprises from the RBA minutes, and the response from the Australian dollar has been muted. At the RBA’s policy meeting earlier in February, bank members decided to extend the QE program for an additional six months, until October 2021. The minutes indicated that the central bank expects that “very significant monetary support would be required for some time, as it would be some years before the bank’s goals for inflation and unemployment were achieved”. For anyone who has painful memories trying to decipher Fedspeak when Allan Greenspan was chair at the Federal Reserve, the RBA’s … [Read More...]
Euro down despite sharp confidence data
The euro is showing slight losses in the Tuesday session. Currently, EUR/USD is trading at 1.2110, down 0.15% on the day. German economic confidence accelerates The German economy continues to struggle under the weight of Covid-19, but there was some positive news on Tuesday. The well-respected ZEW Economic Sentiment survey climbed to 71.2 in January, up from 61.8 beforehand. This sharp gain was all the more impressive, as the street consensus projected a drop to 59.7. . The ZEW summed up the impressive data as follows: “The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months. Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations” … [Read More...]
Pound drifting ahead of UK inflation
The British pound is steady in the Tuesday session. Currently, GDP/USD is trading at 1.3908, up 0.03% on the day. UK Inflation Looms The UK releases a host of inflation indicators on Wednesday (7:00 GMT). The highlight events are headline and Core CPI for January. Headline CPI rose to 0.6% in December and is projected to maintain this clip in January. Core CPI is projected to come in at 1.3%, down slightly from 1.4% in the previous release. These are lukewarm numbers, well below the Bank of England’s inflation target of 2 percent. With the UK still under lockdown due to Covid-19, it’s no surprise that inflation remains low. At the same time, there is more talk of reflation in the US as the economy inevitably … [Read More...]
Dollar pushes yen above 105
The Japanese yen has started the new trading week with losses. Currently, USD/JPY is trading at 105.37, up 0.43% on the day. In the US, markets are closed for President’s day, so we’re unlikely to see much movement from USD/JPY in the North American session. Dollar pushes higher In the past few weeks, we are seeing stronger movement from the Japanese yen. Early last week, the yen gained 0.63%, its strongest one-day gain since November 20. The dollar has since recovered all these losses and is up on Monday for a fourth straight session. In Japan, Preliminary GDP for Q4 of 2020 climbed 3.0%, beating the estimate of 2.4%. Despite this solid release, the risk-on mood continues to favor USD/JPY buyers. Investors have … [Read More...]
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