Market News & Analysis
Pound higher despite Brexit mess; Yen under pressure
High-impact economic news:
08:00 NZD NZIER Business Confidence
11:30 AUD Building Approvals m/m
14:30 AUD RBA Rate Statement
19:30 AUD Annual Budget Release
23:30 USD Core Durable Goods Orders m/m
The Pound Sterling is back in focus after U.K. Prime Minister Theresa May failed to reach a majority vote on a Brexit alternative. British MPs voted down four Brexit options proposed to the House of Commons, leaving the deal in deadlock. May will now hold a 5-hour cabinet meeting in a bid to find a solution before the new Brexit deadline of April 12. Despite the uncertainty, the Pound closed the session higher against the USD, Yen and Euro. The GBP/USD pair rose about 60 pips during Monday’s session, but is already seeing a correction in early trade.
The Pound was offset by a weaker Euro, after the Eurozone reported a raft of weak economic data. Inflation unexpectedly slowed in March from 1.5% to 1.4%, adding to concerns the Eurozone is heading for a recession and pressure on the ECB. Manufacturing in Germany, France and Italy also contracted while Italy’s unemployment rate rose from 10.5% to 10.7% in February.
As a result, the EUR/USD pair fell to a 3.5 week low to close the session at 1.1211. The EUR/AUD pair opened the session with a noticeable ‘gap’ before sliding to an 8-week low of 1.5759.
The Japanese Yen is under pressure after the Bank of Japan’s ‘Tankan Manufacturing Index’ missed expectations in the fourth quarter, falling 7 points. A slowdown in the sector had a direct effect on the Japanese Yen with the currency falling against the majors. The USD rose more than 30 pips against the Yen, while the AUD/JPY hit a 3-week high. Even the EUR/JPY edged higher, despite the Eurozone having its own economic issues.
The Australian dollar ended the session mixed against a basket of currencies. The AUD fell against the USD, the Canadian dollar and the Pound while strengthening against the JPY and EUR. The biggest gains were evident in the AUD/NZD pair with the AUD reaching its highest level since February 13, to close the session at 1.0451. The New Zealand dollar is edging lower again in early trade on Tuesday, after business confidence fell to a near 10-year low.
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