Antipodean currencies were the main focus overnight as NZD/USD rose sharply following an expected rate hike from the Reserve Bank of New Zealand. The latest Australian labour-force data was also stronger than expected with an employment increase of over 47,000 for February after a revised 18,000 gain the previous month as unemployment held steady at 6.0%. AUD/USD had already rallied strongly from a trough around 0.8920 and spiked above 0.9000 for a peak around 0.9100.
The latest Chinese economic data was weaker than expected with an annual industrial production increase of 8.6% compared with 9.5% expected which maintained underlying ease surrounding risk conditions as well as the Chinese outlook. USD/JPY was unable to make any headway and dipped to lows just below 102.50.
EUR/USD had initially maintained a strong tone with a key feature again being the lack of any significant correction weaker following the move higher to 1.3900. In this environment, underlying buying pressure on the pair continued to build and there was a fresh spike higher during the Asian session with a move to the 1.3950 area. Technically, this was seen as significant given the break above long-term downward trend-line resistance as the Euro probed levels last seen in late 2011.
ECB rhetoric continued to have little overall market impact and officials generally remained comfortable with existing policies despite increased media speculation over fresh deflationary pressures.
The headline US retail sales data was close to expectations with a 0.3% gain for February while the core data also at 0.3% was slightly stronger than expected, offset by a downward revision to January’s data. The jobless clams data was significantly better than expected with a decline to 315,000 in the latest week, the lowest figure for over three months. The dollar did respond to the data initially with USD/JPY recovering to the 102.70 area while EUR/USD dipped back below 1.3950.
Equity markets retreated from their best levels in New York under the weight of caution which helped push USD/JPY back to the 102.30 area with some EUR/JPY selling also having a limited negative impact on EUR/USD.
Although the latest UK housing data was slightly weaker than expected, Sterling’s tone was et firmly by the international currency moves. GBP/USD was able to move higher and challenges resistance levels above 1.6700 early in the New York session without being able to sustain a move above this level.