Forex Trading Library

Forex Afternoon Wrap for 3rd March

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Key Forex Afternoon Notes:

  • Japan Monetary base y/y 36.7% vs. 34.3%
  • New Zealand ANZ commodity prices m/m 1.8% vs. 1% previously
  • Australia building approvals m/m 7.9% vs. -1.8%
  • Japan average cash earnings y/y 1.3% vs. 0.6%
  • Australia cash rate 2.25% vs. 2%
  • Switzerland GDP q/q 0.6% vs. 0.3%
  • German retail sales m/m 2.9% vs. 0.5%
  • UK Construction PMI 60.1 vs. 59
  • Eurozone PPI m/m -0.9% vs. -0.5%
  • Canada GDP m/m 0.3% vs. 0.2%

Later

  • New Zealand Global dairy price index
  • US IBD/TIPP economic optimism

The currency markets kicked on a volatile note in anticipation of the RBA’s monetary policy decision. Being a close call, the consensus was tilted to see the RBA cut interest rates by 25bps, but was surprised to see the RBA leave policy unchanged. In its monetary statement, the RBA noted that future easing was possible and that the decision would be taken on a monthly basis. In regards to the inflation outlook, the RBA expects inflation to remain with its target. As always, the RBA’s statement also touched on the Australian Dollar’s exchange rate, which the central bank continues to believe that it is above its fundamental value against the Greenback.

The Aussie dollar managed to rally on the news with AUDUSD touching an intraday high to 0.7825 before giving back some of its gains, to trade near 0.781 at the time of writing. Further momentum is likely to see the pair make a daily close above the 0.7825 level ahead of the GDP data from Australia due tomorrow.

The Kiwi dollar was relatively subdued with lack of any major events, but the Kiwi managed to rally on the RBA’s decision. NZDUSD was trading near 0.754 levels before the US trading session opened. The main risk to the Kiwi dollar comes from today’s New Zealand Global dairy price index.

The European session saw some tier 2 fundamentals being released with German retail sales rising above estimates to 2.9%. Other news from Europe included a better than expected unemployment change from Spain. PPI data for the month disappointed falling -0.9% below estimates of -0.5%. The Euro was trading mixed during the day but considerably weaker after failing to hold on to its previous gains above 1.120. The currency pair made a fresh monthly low to 1.11579.

Economic data from the UK saw the construction PMI beat estimates, but the British Sterling was subdued on the data. BoE Governor Mark Carney appeared before the Treasury Committee on a currency probe investigation. During the hearing he noted that the BoE would look to a rate cut should inflation stay stubbornly lower from the current levels. The Sterling did not react much but was noticeably weaker across the board.

At the open of the US trading session, Canada’s GDP data was the main event as the data would be looked up by the BoC as well ahead of the Canadian interest rate decision tomorrow. Overall, Canadian GDP beat estimates rising 0.3% m/m and 2.4% on an annualized basis. With a better than expected GDP numbers, the BoC is likely to keep its policy on hold at its meeting tomorrow.

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