The start of the week saw the impact of poor Chinese housing data being felt by a number of currencies.
The figures from China triggered a decline in global iron ore prices – a significant export commodity of Australia – and the result was the biggest decline in Australian government bond yields in over a week. Traders were nervous that growing Chinese stockpiles on iron ore could substantially drive down the price of the steelmaking material, and this caused the Australian dollar to weaken. It weakened further as the week went on, touching month-lows against sterling as Toyota announced that it would cease its manufacturing of motor cars in the country. This came off the back of other recent withdrawals from Ford and Holden.
The news from China over the weekend had the reverse impact on the Japanese yen and Swiss franc, which took strength from the figures as traders looked to buy into the traditionally safe-haven currency. This strength was then built upon further yesterday amid increasing tension in Ukraine, with Russian President Vladimir Putin reportedly having put fighter jets on combat alert and reports this morning stating Russian military forces are blockading Sevastopol airport in the Ukrainian region of Crimea.
The New Zealand dollar strengthened significantly, touching 6-week highs and climbing by almost a percent against sterling following significantly better-than-forecast trade balance figures. Business confidence figures released early this morning supported this positive outlook for the currency, showing near a 20-year high as firms look forward to strong economic growth.
Looking forward to today we have Canadian growth figures released this afternoon, while overnight tonight we have more influential data in the form of manufacturing figures out of China.
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