Talking Points:
- Soft Retail Sales Data May Cool Fed Rate Hike Bets, Push US Dollar Lower
- NZ Dollar Soars on RBNZ Rate Decision, Aussie Recovers on Jobs Report
A quiet economic calendar in European trading hours is likely to see traders looking ahead to February’s US Retail Sales report. Consensus forecasts call for 0.3 percent increase, which would mark the strongest outcome in three months. Last week’s payrolls data notwithstanding however, US economic news-flow has tended to underperform relative to expectations since late December. This warns that analysts may be overestimating the economy’s vigor and opening the door for a downside surprise. Such an outcome may cool Fed rate hike speculation, weighing on the US Dollar.
The New Zealand dollar outperformed in overnight after the RBNZ signaled it was in no hurry to cut interest rates at its monetary policy meeting. Governor Graeme Wheeler highlighted a range of factors underpinning strong economic growth and dismissed soft inflation readings in the near term as largely reflective of the transitory impact of oil prices. Speaking directly to the benchmark lending rate, Wheeler projected “a period of stability” ahead.
The Australian dollar likewise advanced following a narrowly better-than-expected Employment report. The figures showed the economy added a net 15,600 jobs in February, narrowly topping economists’ expectations for 15,000 increase. The unemployment rate declined to 6.3 percent having hit a 13-year high at 6.4 percent in the prior month.
