EncoreFX’s daily market updates are written by our experienced and professional dealing team.
The Kiwi dollar drifted lower again overnight, still weighed down by disappointing data out of Australia earlier in the week. The Aussie itself remained weak, down near the key 70 US cent level. The Euro was the main mover overnight, falling to a 21 month low vs the USD, as the ECB significantly cut its growth and inflation forecasts. No major local data in the calendar today, with the next big event being the closely watched US non-farm payrolls number due out tonight.
ECB Leaves Rates Unchanged
The ECB left interest rates unchanged at record lows as expected overnight. However it was the Central Bank’s subdued outlook on the economy that was of more interest and triggered a sell off in the EUR, sending it down its lowest level since June 2017. The ECB has changed tack on its monetary tightening plan and delayed any interest rate hike until at least 2020. They have also announced a fresh set of cheap stimulus loans to European Banks to help revive a slowing Euro Zone economy.
Australian Retail Sales Fall
The AUD came under more pressure yesterday as retails sales rose by only 0.1% in January, compared to market expectations of a 0.3% rise. The worse than expected number was hot on the heels of a disappointing GDP number the day before, and casts further doubt on the RBA’s economic growth projections. Trade Balance numbers were also published yesterday, with Australia recording its second largest trade surplus on record in January. Exports have surged to a record high, largely due to an increase in the value of gold exports. This was not enough to give the AUD a boost, which begins the day hovering just above the US 70 cent mark.
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