The Australian Dollar to Canadian Dollar (AUD/CAD), Australian Dollar to Swiss Franc (AUD/CHF) and Australian Dollar to Japanese Yen (AUD/JPY) exchange rates all softened early in Friday’s European session while the Australian Dollar to Euro (AUD/EUR), Australian Dollar to Indian Rupee (AUD/INR) and Australian Dollar to US Dollar (AUD/USD) exchange rates increased.
The Australian Dollar has been trading amid an extremely quiet week for domestic data and has therefore been extremely sensitive to any changes in commodity prices and global developments.
In addition, the Reserve Bank of Australia (RBA) is speculated to be on track to cut interest rates again. Thursday’s -2.2% contraction in Q4 Private Capital Expenditure figure has seen many economists forecast rate cuts as soon as next week.’
ANZ Banking Group Daniel Been commented: ‘Our expectation is the RBA will cut the rates next week and this [the capex data] firms our belief. My expectation is it [the Australian Dollar] will fall further. The domestic economy story isn’t that good and rate differentials people are earning are rapidly diminishing.’
Meanwhile, the Euro to Australian Dollar (EUR/AUD) exchange rate is tentative ahead of German Consumer Price Index (CPI) stats. Inflationary figures will be eyed carefully as falling oil prices create tumbles in headline inflation the world over. February’s German CPI is forecast to reach -0.3% from January’s -0.4%.
In addition, negotiations between Greece and its creditors continue, overshadowing the Euro. Friday will see the German government vote on Greece’s reform proposal.
German finance minister Wolfgang Schauble commented: ‘We’re not talking about new billions for Greece, we’re not talking about any changes to this programme – rather it’s about providing or granting extra time to successfully end this programme.’
SNB Shock Sees KOF Leading Indicator Fall by Most Since 2011
The Swiss Franc to Australian Dollar (CHF/AUD) exchange rate was offered some support when the KOF Leading Indicator rose fell less than forecast. February’s figure was predicted to fall from 96.1 to 89.0; however, the actual reading remained in the 90’s at 90.1.
The fall was still the biggest since 2011; KOF commented: ‘This indicates that the monetary policy shock has already moved beyond the realm of sentiment and is now starting to manifest itself in the real economy.’
The Japanese Yen was bolstered when Japanese core inflation fell from 2.5% to 2.2% in January on the year and Construction Orders jumped from 7.5% to 27.5% on the year in January.
HSBC economist Izumi Devalier commented: ‘The economy is recovering steadily, mainly on the back of external demand. We haven’t really seen much of a recovery in household consumption at this stage.’
The Canadian Dollar enjoyed some support on Thursday when Canadian inflation fell less than economists had forecast. The Consumer Price Index softened from 1.5% to 1.0% in January, defying 0.8% predictions.
In addition, the Bank of Canada (BOC) CPI remained at 2.2% in January rather than dropping to 2.1%.
Furthermore, investor sentiment increased as speculation for another BOC rate cut ebbs away.
Economist Dina Ignjatovic stated: ‘Developments that have taken place since the last Bank of Canada meeting last month suggest that another rate cut in March is unlikely.’
The US Dollar is expected to experience fluctuations on Friday when the US Gross Domestic Product and Personal Consumption stats are released. Any favourable figures could boost the US Dollar exchange rate against other major currency peers.
In addition, US Pending Home Sales and University of Michigan Confidence figures will also emerge in Friday’s session.
The Indian Rupee gained after Standard and Poor’s credit rating agency increased its India Gross Domestic Product growth forecast. With a lack of Indian domestic data this week, the Rupee is extremely sensitive to any global developments.
Australian Dollar Exchange Rate Forecast: AUD/EUR, AUD/CHF, AUD/USD, AUD/CAD, AUD/JPY
The Australian Dollar exchange rate could be in for hefty fluctuations on Monday with the release of AiG’s Australian Performance of Manufacturing Index. In addition, the AUD/JPY currency pair could experience movement with the release of Japanese Capital Spending stats.
Swiss SVME Purchasing Managers Index will also be published along with Eurozone Consumer Price Index figures.
The Australian Dollar to Euro (AUD/EUR) exchange rate is trading in the region of 0.6973. The Australian Dollar to Swiss Franc (AUD/CHF) exchange rate is hovering at 0.7430. The Australian Dollar to US Dollar (AUD/USD) exchange rate is reaching 0.7822. The Australian Dollar to Canadian Dollar (AUD/CAD) exchange rate is residing at 0.9768. The Australian Dollar to Japanese Yen (AUD/JPY) exchange rate is trading at 93.2400. The Australian Dollar to Indian Rupee (AUD/INR) exchange rate is trending in the region of 48.3480.