Trade Talks, U.S GDP numbers and Brexit to Drive the USD and the GBP

Earlier in the Day:

It was a relatively quiet morning on the economic calendar. March business confidence figures out of New Zealand was the only major data item of the session.

Outside of the numbers, the UK Parliament failed to deliver a direction on Brexit, pinning back the Pound. Concerns over economic growth returned through the U.S session and filtered into the Asian session. Treasuries yields tumbled overnight and the yield curve inverted once more, sparking more fears of an impending recession.

For Kiwi Dollar,

Following Wednesday’s RBNZ driven tumble, the ANZ Business Confidence Index fell from -30.9% to -38%. Forecasts had been for a pickup to -24.3%.

The figures reflect that a net 38% of respondents expect economic conditions to deteriorate in the year ahead. According to the figures released by ANZ:

• Firms’ expectations for their own activity eased 5 points to a net 6% expecting an improvement.
• Across the sectors, the retail sector was the least optimistic, while services were the most optimistic.
• Employment intentions fell by 2 points to +1%.
• Profit expectations fell 3 points to a net 14% expecting profits to decline.
• A net 40% expect it to be tougher to get credit, falling by 2 points.
• Export intentions fell to below levels seen during both the Asian and global financial crisis.

The Kiwi Dollar moved from $0.67968 to $0.67842 upon release of the figures. At the time of writing, the Kiwi Dollar stood at $0.6818, up 0.31% for the session.

Elsewhere,

At the time of writing, the Aussie Dollar was up 0.18% to $0.7097. While economic growth concerns pinned back the Aussie Dollar, hopes of a resolution to the trade war provided support.

Risk sentiment provided support for the Japanese Yen, however, which was up by 0.31% to ¥110.17 against the U.S Dollar at the time of writing.

The Day Ahead:

For the EUR

It’s another quiet day on the economic calendar. Prelim March inflation figures out of Spain are due out and will likely have little influence on the EUR. Of greater influence will be the Eurozone’s business confidence numbers due out later in the day. A forecasted fall in confidence would pressure the EUR.

Outside of the numbers, a resumption of trade talks between the U.S and China will likely garner plenty of interest. Progress would be supportive of the EUR through the day, though the upside could be capped by the negative sentiment toward economic growth prospects.

At the time of writing, the EUR was up 0.09% at $1.1254.

For the Pound

Economic data out of the UK is limited to house price figures that will have a muted impact on the Pound.

Following a lack of progress in Parliament on Wednesday, the Pound remained under pressure in the early hours. Theresa May offered the much talked about resignation in exchange for support for her deal.

While the focus will shift to a shorter number of Brexit connotations next week, a vote could come sooner should the British PM manage to align all the ducks.

At the time of writing, the Pound was up 0.04% to $1.3194.

Across the Pond

It’s a busy day ahead on the economic calendar. On the data front, key stats due out of the U.S include 4^th quarter GDP numbers, the weekly jobless claims figures and pending home sales data.

Following a downward revision to December retail sales figures that were released on 11^th March, 2^nd estimate GDP number is forecasted to come in at 2.4%. Anything weaker and risk sentiment will deteriorate more significantly.

While we would expect the weekly jobless claims figures to have some impact, pending home sales figures will likely be ignored.

Outside of the numbers, FOMC members Quarles, Clarida, Bowman, and Williams are scheduled to speak.

Expectations are for the FED to cut rates by September. Today’s speeches could give some more clarity on what lies ahead on the policy front.

On the positive for risk sentiment could be progress on trade talks between the U.S and China. Talks resumed in Beijing this morning and progress will need to be made to ease concerns over the economic outlook.

At the time of writing, the Dollar Spot Index was up 0.10% to 96.833.

For the Loonie

Following disappointing trade data released on Wednesday, it’s a quiet day ahead. With no material stats scheduled for release, the Loonie will be in the hands of risk sentiment through the day.

Crude oil prices could get a boost should progress be made on the U.S – China trade talks that resumed this morning.

The Loonie was up 0.03% at C$1.3405, against the U.S Dollar, at the time of writing.