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Wider-Than-Forecast Trade Deficit Sends New Zealand Dollar Sliding

Pound News: Brexit Jitters Continue to Weigh on GBP

In the absence of any fresh UK data the Pound (GBP) struggled to find any particular support, with investors still somewhat jittery over Brexit developments.

As the prospect of a departure from the customs union looks increasingly likely concerns over the future health of the UK economy naturally increased.

Demand for the Pound is likely to remain somewhat muted ahead of Prime Minister Theresa May’s speech on the subject of Brexit on Friday.


Euro News: German Inflation Falls Short of Forecast

Markets were naturally discouraged to discover that the German consumer price index had dipped further than forecast in February, slowing from 1.6% to 1.4% on the year.

This suggests that inflationary pressure within the Eurozone’s powerhouse economy is still rather lacking, giving the European Central Bank (ECB) greater incentive to leave monetary policy on hold.

If this morning’s Eurozone inflation data also disappoints this could see Euro (EUR) exchange rates extending their losses further.


US Dollar News: Fed Chair Powell Paves Way for Policy Consistency

While both January’s advance goods trade balance and durable goods orders figures fell short of forecast this was not enough to weigh down the US Dollar (USD) on Tuesday.

Investors were more focused on comments from new Federal Reserve Chair Jerome Powell, who proved a little less dovish in tone than some had feared.

Nevertheless, if the annualised fourth quarter US gross domestic product also shows signs of weakness this afternoon the US Dollar may struggle to maintain any particular bullishness.


Canadian Dollar News: CAD Unable to Shrug Off Oil Market Weakness

Anticipation ahead of the latest Canadian federal Budget kept Canadian Dollar (CAD) exchange rates under pressure yesterday.

Worries over the outlook of the global oil market also limited the appeal of the commodity-correlated Canadian Dollar, with US output looking set to keep prices under pressure for some time to come.

Even so, if January’s industrial product price index shows a rebound on the month this may offer CAD a rallying point today.


Australian Dollar News: Risk Aversion Limits AUD Exchange Rate Strength

While the ANZ Roy Morgan weekly consumer confidence index showed some improvement the Australian Dollar (AUD) was unable to capitalise on this positive result.

With markets in a more risk-averse mood thanks to the nature of Fed Chair Powell’s commentary the appeal of the ‘Aussie’ was rather limited.

A stronger showing from tonight’s Australian manufacturing PMI may encourage AUD exchange rates to regain some ground, however.


Upcoming Data

Wednesday, 28 February

10:00     Eurozone Consumer Price Index

13:30     Canadian Industrial Product Price

13:30     US Annualised Gross Domestic Product

21:45     New Zealand Terms of Trade Index

22:30     Australian Manufacturing PMI

David Worthington

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