It has been a mixed day in terms of macro data releases but ultimately major crosses remain within their near-term ranges versus the Dollar.
The AUD/USD cross has risen back near the top end of a 3-week range to 0.712 thanks to strong Australian retail sales and trade data for February, a rise in the Chinese services PMI in March and reports of progress in trade talks between the US and China. Australian retail sales growth hit an 13-month high of 0.8% mom while the trade surplus widened to a multi-year high of AUD 4.8bn.
The Euro also pushed higher back above EUR/USD 1.12 following the release of stronger-than-expected retail sales and PMI numbers. Eurozone retail sales growth in February was at 0.4% mom twice as fast as expected while the composite PMI edged higher to 51.6 in March from 51.3 in February.
Sterling continues to largely ignore UK macro data releases, swaying to a never-ending stream of Brexit-related developments. The UK services PMI fell to 48.9 in March, below 50 – contraction territory – for the first time since July 2016, suggesting that GDP growth may have contracted in Q1 2019 or at least remained very weak. But GBP/USD still managed to remain broadly stable around 1.314 thanks to Dollar weakness and renewed market optimism that Prime Minister Theresa May could find a way out of the current Brexit impasse. She agreed yesterday to cross-party talks with the leader of the Labour Party and there is now talk of the UK possibly adopting a very soft Brexit.
The Dollar was hit by a double-whammy of weaker-than-expected private sector jobs data and a sharp fall in the ISM non-manufacturing PMI in March. ADP data show that only 129,000 jobs were created in March (versus 184,000 expected) while the PMI print fell two big figures to 56.1 – an eight month low. Recent US macro data had suggested that GDP growth may have stabilised in Q1 around 2% qoq annualised but today’s numbers if anything point to risks to the downside.
