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AUD on top of the world, JPY underperforms

CMC Markets

The top performer among major currencies today has been AUD, which has gained about 1.25% against USD over the last 24 hours and has continued to climb through US trading hours. Strong Australian retail sales and trade numbers and capital returning to risk markets have given AUD a strong tailwind and carried NZD along for the ride. AUD has been active this week on stronger than expected Australian data and the RBA holding steady on interest rates. It could remain active into the weekend with traders looking to today’s Construction PMI report for confirmation of an improving economy. EUR has also been climbing today, pulling the pegged CHF and DKK higher with it after the ECB held interest rates steady and raised its GDP growth forecast for this year. These developments sent traders who had been speculating on new monetary stimulus or a rate cut scrambling to get back on side. The loonie has taken flight today, soaring on a much stronger than expected Canadian Ivey PMI report. This news indicated that while the December ice storm had a big impact on the Canadian economy, the cold of January and February has not had the same effect. USDCAD has broken down through $1.1000 and may remain active right through to the weekend particularly around tomorrow morning’s job report. US indices have been marching higher again today, with the S&P hitting a new all-time high. Traders have responded positively to this week’s jobless claims report which fell to its lowest level in three months since November. This suggests that as winter storms have abated, the job market has started to strengthen again. Traders may look to tomorrow’s nonfarm payrolls for indications of whether the weather continues to impact employment. Markets have been sending mixed signals about what traders think of political risk, suggesting indecision. Crude oil and JPY are down suggesting complacency while gold is up and USD is down suggesting concern. Today Crimea's parliament voted to join Russia and called a referendum for March 16th, while the US indicated it won’t accept the results and continues to threaten sanctions. This suggests that the political situation remains a wild card and could just as easily flare up without notice as recede in the coming days, keeping the potential for trading reversals and opportunities high. Economic News Significant announcements released overnight include: UK monetary policy decision 0.50% and £375B QE no change as expected ECB monetary policy decision 0.25% no change as expected US jobless claims 323K vs street 336K and previous 349K US factory orders (0.7%) vs street (0.5%) US natural gas storage (152 BCF) street (137 BCF) Canada Ivey PMI 57.2 vs street 53.1 vs previous 56.8 Upcoming significant announcements include: 9:30 am AEDT Australia construction PMI previous 48.2 4:00 pm AEDT Japan leading indicator street 112.4 9:30 am GMT Bank of England inflation forecast previous 3.6% 11:00 am GMT Germany industrial production street 3.9% 8:30 am EST US nonfarm payrolls street 150K vs previous 113K 8:30 am EST US private payrolls street 145K 8:30 am EST US unemployment rate street 6.6% 8:30 am EST Canada employment change street 15K vs previous 29K 8:30 am EST Canada unemployment rate street 7.0% 8:30 am EST Canada full-time jobs previous 50K 8:30 am EST Canada part-time jobs previous (21K) 8:30 am EST US trade balance street ($38.5B) 8:30 am EST Canada trade balance street ($1.2B) TBA Sat China trade balance street $14.5B 12:30 pm AEDT Sun China consumer prices street 2.1% vs previous 2.5% 12:30 pm AEDT Sun China producer prices street (1.9%) 11:50 am AEDT Mon Japan GDP annualized street 0.9% TBA Mon China new yuan loans street 721B