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March 2016

GDP raises Aussie momentum

Published: Thursday 03 March 2016

  • GDP raises Aussie momentum
  • ECB easing expectations sees Euro under pressure 
  • US initial jobless claims, main focus today
     
Yesterday we saw Australian Dollar higher across the board as GDP grew a solid 0.6% in Q4 helping the Aussie push to a 3 month high versus the US Dollar. Overnight the Australian trade balance for January came in much better than expected. The narrowing deficit was due to a 1.1 per cent monthly increase in exports, matched with a similar decline in imports. The Australian Dollar remains on a firm footing.

Last night the US Dollar edged higher as Federal Reserve Bank of San Francisco President John Williams said FED rate outlook could change slightly after March and declined to comment on whether he’d support a hike this month. Williams also stated the economic projections haven’t changed by more than a “tenth here or there” compared to December and sees no signs of fragility in the U.S. economy. The FED continues to be “on the path to raising rates.”

Commodity currencies continue to edge higher today together along with Sterling while the Euro is feeling the pressure from expectations of European Central Bank easing after the weaker inflation data released this week. Looking ahead to today, it is very busy on the data front from the Eurozone as we await German, French and Italian services data. UK Services PMI is released at 9.30 GMT and as the sector accounts for over 70% of the economy, this will be very closely watched.

However, the main focus will be this afternoon with US initial jobless claims for February which will be released at 13:30 GMT expected to come in at 271k compared to a previous of 272k. Followed by the ISM non-manufacturing PMI and Factory orders both for February. Traders are likely to have one eye on tomorrow’s Non-Farm payrolls however positive readings this afternoon could see the Dollar strengthen as markets begin to price in the risk of earlier rate hikes from the Federal Reserve.
 
FX Research and Daily Currency Analysis with Zeta Webber

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