Dollar continues to see red early on in the day, as the markets respond to noise from Capitol Hill and the possible impact of a trade war that has seen demand for the safe havens on the rise this week.
Earlier in the Day:
Economic data through the Asian session this morning was limited to 4th quarter GDP numbers out of New Zealand.
The NZ economy grew by 0.6% in the 4th quarter, quarter-on-quarter, falling short of a forecasted 0.8%, whilst growing at the same pace as in the 3rd quarter, according to figures released by NZStats.
Growth through the 4th quarter was driven by the service sector, which saw 1.1% growth, largely attributed to a 2.3% increase in business services, with the wholesale, retail, rental hiring and real estate and transport service industries also making significant contributions in the quarter.
Household spending also saw solid growth, up 1.2%, attributed to households eating out more and spending more on groceries and alcohol.
In contrast, agricultural production fell by 2.7%, attributed to lower milk production that led to a 4.4% fall in dairy exports. The fall in dairy manufacturing was accompanied by a fall in alcohol beverage production, which led to an overall 0.1% fall in food manufacturing.
Elsewhere, construction activity rose by 0.7%, with investment in fixed assets up 2.1%.
Year-on-year, the economy grew by 2.9%, with growth slowing from 3% in the 3rd quarter.
The Kiwi Dollar slipped from $0.73286 to $0.73071 upon release of the figures.
At the time of writing, the Kiwi Dollar recovered to $0.7324, down 0.11% for the day, with the Aussie Dollar down 0.09% to $0.7870, while the Japanese Yen was up 0.45% to ¥105.84 against the U.S Dollar, demand for the Yen coming from falling Treasury yields off the back of weak U.S retail sales figures and rising appetite for the safe haven through the session.
In the equity markets, the Nikkei was up 0.09%, recovering from early losses, in spite of the stronger Yen, to join the Hang Seng and CSI300 which were up 0.12% and 0.3% respectively at the time of writing, while the ASX200 continued to struggle, down 0.24%, weighed by the big-4 banks.
The Day Ahead:
Following a softer EUR on Wednesday, off the back of more dovish commentary from the ECB President, economic data out of the Eurozone this morning is limited to finalized February inflation figures out of France, which are unlikely to have a material impact on the EUR, barring any upward revisions.
At the time of writing, the EUR was up 0.11% to $1.2381, with market sentiment towards the Dollar driving demand for the EUR, in spite of Draghi’s dovish tones.
For the Pound, a quiet week is rapidly coming to an end, with the Pound having had little direction this week from the stats, as the EU continues to redraft the Brexit Treaty 1st draft that had been released at the end of February. Tough talk from Juncker has had little impact to date, with the next draft now key to the direction of the Pound near-term.
Interestingly, increased tension between the UK and Russia appears to have limited impact on the Pound, following the decision to expel 23 Russian diplomats over the poisoning of an ex-Russian spy.
At the time of writing, the Pound was up 0.16% to $1.3984, as the Dollar continues to struggle with the U.S administration and Trump’s latest moves on Capitol Hill
Across the Pond, stats out of the U.S this afternoon include the weekly jobless claims figures, February’s import and export price numbers and March manufacturing PMIs out of New York State and Philly.
With import prices forecasted to be on the softer side in February, in line with or weaker numbers would further ease concerns over a near-term pickup in inflationary pressures, while manufacturing PMI numbers may also add pressure on the Dollar, if in line with forecasts.
On the political front, Trump continues to push for a trade war, with administration moderates Tillerson and Cohn having left the ship. The instability within the White House, coupled with positive economic growth numbers overseas have weighed and will likely continue to weigh as the market looks to park in the safe havens of the EUR, Yen and Franc until the dust settles around the Oval Office.
At the time of writing, the Dollar Spot Index was up 0.05% to 89.656, as the markets look towards the Oval Office and what looks to be some softer economic stats out of the U.S this afternoon to add to the Dollar’s troubles.
Across the border, the Loonie is back in action this afternoon, with the release of the ADP employment change numbers for February. While positive figures will provide the Loonie with some immediate support, it ultimately boils down to NAFTA and anticipated impact on monetary policy, with the Bank of Canada likely to consider policy based on any revised trade terms.
At the time of writing, the Loonie was up 0.04% to C$1.295 against the Dollar.