Risk Appetite Hits the Greenback ahead of U.S GDP Numbers and the FED

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Aussie Dollar and Kiwi Dollar were in action in the early part of the day.

Outside of the numbers, the coronavirus numbers and progress by governments on easing lockdown measures also influenced.

On Tuesday, the number of new coronavirus cases rose by 75,118 to 3,134,199. On Monday, the number of new cases had risen by 66,953. While up from Monday, this was down marginally from a 75,450 increase on the previous Tuesday.

France, Germany, Italy, and Spain reported 6,020 new cases on Tuesday, which was down from 9,262 new cases on Monday. France reported just 69 new cases, with Spain seeing a marginal decline from Monday.

From the U.S, the total number of cases rose by 25,258 to 1,035,765 on Tuesday. On Monday, the total number of cases had risen by 23,699. On Tuesday, 21^st April, the total new number of cases had risen by 25,985.

For the Kiwi Dollar

March trade data was in focus in the early part of the day.

The trade deficit widened from a revised NZ$3,300m to NZ$3,460m in March.

According to NZ Stats,

• The total value of goods exports increased by a record NZ$215m (3.8%) from March 2019 to hit NZ$5.8bn.
  • A bumper Kiwifruit harvest and higher milk powder prices and meat drove exports in March 2020.
  • The value of fruit exports rose NZ$115m (54%) in March, with exports of gold kiwifruits almost doubling.
  • China, the EU, and Japan received more than 75% of the NZ$187m of kiwifruit exports in the month.
  • There were declines in forestry products, however. A marked fall in the exports of untreated logs to China led to an NZ$185m (35%) fall in forestry product exports.
• Goods imports in March 2020 increased NZ$369m (7.7%) to NZ$5.1bn.
  • A sharp increase in petroleum and products led to an increase in imports.
  • The imports of crude oil jumped by NZ$191m (59%), diesel by NZ$105m (80%), and petrol by NZ$91m (168%).
• The monthly trade surplus widened from NZ$531m to NZ$672m in March 2020.

The Kiwi Dollar moved from $0.60590 to $0.60599 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.83% to $0.6106. The latest trade figures and lack of COVID-19 cases suggests that the RBNZ may be able to avoid delivering negative rates. At least for now…

For the Aussie Dollar

1^st quarter inflation figures were in focus this morning.

The annual rate of inflation accelerated from 1.8% to 2.20%, coming in above a forecasted 2.0%. Quarter-on-quarter, consumer prices increased by 0.3%, following a 0.7% rise in the 4^th quarter. Economists had forecast a 0.2% increase.

According to the ABS,

• In the March quarter, there were marked increases in prices for food and non-alcoholic beverages (+1.9%), alcohol and tobacco (+1.6%), education (+2.6%), and health (+1.7%).
• Droughts and bushfires drove prices for food, with fruit and veg prices up by 6%.
• There were significant declines in prices for automotive fuel (-6.0%) and travel-related prices.
• Prices for domestic holiday travel and accommodation fell by 3.1%, with international holiday and accommodation prices falling by 3.0%.
• Influence from COVID-19 was evident, with non-durable household product prices rising by 3.4%.

The Aussie Dollar moved from $0.65139 to $0.65286 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.57% to $0.6528. The latest inflation figures supported the RBA’s plans to stand pat on monetary policy near-term.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.32% to ¥106.53 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s another quiet day ahead on the economic calendar. Key stats are limited to prelim April inflation figures out of Germany.

With the FED in action late in the day and deflationary pressures building off the back of the slide in oil prices, the markets will likely brush aside the numbers.

Expect further updates on plans to ease lockdown measures, the latest COVID-19 numbers, and any chatter from Brussels to influence.

At the time of writing, the EUR was up by 0.29% to $1.0851.

For the Pound

It’s another a particularly quiet day ahead on the economic calendar. There are no material stats to provide the Pound with direction.

The lack of stats will continue to leave the Pound in the hands of market risk sentiment and the latest COVID-19 updates.

For now, it is all about lockdown measures and which nations are making early moves that will give them on a head start on growth.

At the time of writing, the Pound was up by 0.39% to $1.2474.

Across the Pond

It’s a relatively busy day ahead on the U.S economic calendar. Key stats include 4^th quarter GDP numbers and March pending home sales figures.

Late on the day, the FOMC will also deliver its April monetary policy decision. Economists are anticipating a hold on interest rates. Will there be any further expansion to the QE program or the promise of zero rates?

Expect the press conference to garner plenty of interest… Trump will be hoping that his wish of zero rates comes true.

Outside of the numbers, COVID-19 news will be key ahead of the FOMC.

The Dollar Spot Index was down by 0.19% to 99.678 at the time of writing.

For the Loonie

It’s yet another quiet day on the economic calendar, with no material stats due out to provide the Loonie with direction.

Expect any dovish chatter from the FED to weigh on the Loonie late in the session. While we have seen the Loonie showing some resilience amidst falling crude oil prices, the weekly EIA inventory numbers will also be in focus.

The Loonie was up by 0.38% to C$1.3945 against the U.S Dollar, at the time of writing. U.S Dollar weakness delivered early gains.