Yesterday we said that the rallies in the New Zealand and Australian dollars were unconvincing. Unsurprisingly the moves have reversed themselves.
The biggest mover was the New Zealand dollar which dropped 1.2 percent against the greenback. The country’s trade surplus turned into the deficit last month, which was only the second time in the past 10 years that New Zealand reported a deficit. We had called for a weaker number in yesterday’s Daily Fundamentals, given the sharp drop in the Purchasing Managers Index. The Australian dollar also came under selling pressure as business confidence dipped into negative territory in the first quarter. The Canadian dollar was the only commodity currency to rally even though we think that weakness will resume in tomorrow’s GDP report. Retail sales have been weak, which points to softer GDP growth in the month of February.