The Australian Dollar benefitted from the release of the economic surprise index, which showed that the nation posted positive macroeconomic fundamentals, surpassing analysts’ forecasts for the most part.
The Australian currency weakened during early Asian market hours while Japan’s markets were closed for a national holiday. The Aussie climbed after U.S. Federal Reserve chairwoman Janet Yellen stated that the central bank could begin winding down stimulus this year, at which point the Fed may consider raising the benchmark interest rate. The Aussie rallied following the release of the economic surprise index which posted at 50.60, denoting that most economic forecasts were accurate, and in many occasions, the data even beat prior expectations.
U.S. Maintains Rating
The Fitch ratings agency confirmed that the U.S. would maintain its AAA rating, and raised its outlook from stable to negative as lawmakers increased the debt ceiling for more than twelve months, reducing the likelihood that the country would default. Fitch also stated that its decision was based on the fact that the federal deficit has dropped.
Sterling Set For Big Drop
The British Pound appeared to be heading for its largest weekly decline in four months against the greenback after the Federal Reserve hinted that it may raise the cost of borrowing money in the future. Bank of England officials were divided on the extent of the country’s economic slack. The British exchange rate declined against the majority of its counterparts subsequent to reports confirming that the budget deficit expanded in February due to a hike in government spending. According to official data, the British government spent 9.3 billion Pounds, surpassing revenues, while it spent 9.2 billion pounds a year prior.
Canadian Dollar Boosted By Solid Metrics
The Canadian Dollar advanced against its U.S. counterpart as demand for the latter ebbed following stellar economic releases out of Canada regarding retail sales and inflation. The Loonie dipped after Fed Chairwoman Janet Yellen spoke at a press conference in order to discuss the possibility of an interest rate hike in 2015. In Canada, domestic news divulged that core consumer price inflation, which does not take into consideration volatile items, climbed 0.7 percent and consumer price inflation went up 0.8 percent. Separate announcements showed that retail sales rose 1 percent in January, surpassing forecasts for a 0.9 percent hike.
Euro Affected By Risk Aversion
The Euro traded above $1.3770 during the Asian Forex market hours, and it remained under pressure as risk aversion began to dominate the markets as tensions between Russia and the Ukraine continued to dominate the headlines.