- The Australian dollar fell against the greenback but rose against most of the major crosses on Thursday.
- Chinese economic data released during the session was a tad disappointing, while hopes for a near-term US-Sino trade deal dimmed.
- UK politicians voted to extend the Brexit deal deadline, if required.
- The BoJ will announce its March interest rate decision today. Most of the major data releases will arrive in the second half of the session.
The Australian dollar had a mixed session on Thursday, falling against the greenback but finishing higher against most of the major crosses.
Here’s the scoreboard at 8am in Sydney on Friday.
AUD/USD 0.7065 , -0.0028 , -0.39%
AUD/JPY 78.88 , 0.04 , 0.05%
AUD/CNH 4.7487 , -0.0039 , -0.08%
AUD/EUR 0.6248 , -0.0013 , -0.21%
AUD/GBP 0.5335 , 0.0018 , 0.34%
AUD/NZD 1.0350 , 0.001 , 0.10%
AUD/CAD 0.9418 , -0.0017 , -0.18%
After opening the session at .7093, the AUD/USD eased lower in Asian trade, adding to losses in the second half of the session following the release of Chinese industrial output, fixed asset investment and retail sales data that was either in line or slightly below market expectations.
Reports that US President Donald Trump and Chinese President Xi Jinping were unlikely to sign off on a trade deal in the near-term also weighed on the Aussie, seeing the AUD/USD fall to as low as .7042 before gradually recovering in late European and North American trade.
“Reports that a Trump-Xi meeting might not take place at least until late April, but which could be expanded to a full state visit rather than just a photo-op to sign a trade deal, were greeted with some disappointment,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.
“Since then, US Treasury Secretary Steve Mnuchin has been out on CNBC confirming that there will be no Trump-Xi meeting this month at least but that he is pleased with progress on trade talks.”
The latter comments, along with remarks from Donald Trump that the US is “getting what we have to get” and getting it “relatively quickly” in relation to trade negotiations, may explain the Aussie’s modest recovery towards the close.
Against the major crosses, the Aussie’s other big move on Thursday came against the British pound that succumbed to profit-taking after a strong rally earlier in the week.
As expected, the UK Parliament voted to extend the Brexit deal deadline March 29 for at least a further three months, with the potential for an even further delay should EU members agree.
“[The] GBP/USD eased by around 80 pips and AUD/GBP lifted modestly after the House of Commons voted 412 to 202 on a motion to extend the Article 50 Brexit deadline beyond 29 March,” said Joseph Capurso, Senior Currency Strategist at the Commonwealth Bank.
“The length of the delay will depend on whether Prime Minister Theresa May can get her Brexit deal passed by the House of Commons by March 20.”
Should May’s deal fail to pass for a third occasion, the EU will need to approve an extension at a summit held on March 21 to 22. That, at this point, is anything but guaranteed, adding to the risk of the UK crashing out of the EU at the end of this month without an exit deal.
Turning to the day ahead, it looks set to be a quiet session for markets with little on the economic calendar to speak of.
There’s no data released in Australia. Elsewhere, Chinese new home prices is the only major release scheduled in Asia.
The Bank of Japan (BoJ) will also announce its March monetary policy decision around 1pm AEDT. While the BoJ appears no closer to achieving its inflation mandate, with no updated economic forecasts forthcoming at this meeting, it’s unlikely that any change in policy settings will occur at this meeting.
Later in the session, the main events will be the release of Eurozone consumer price inflation, Italian industrial orders and sales along with industrial production, Empire State manufacturing index, JOLT job openings and University of Michigan consumer confidence survey in the United States.
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