• EUR/CAD +0.7%
• AUD/NZD +1.5%
• AUD/JPY -1.2%

EUR/CAD

Euro Boosted By Inflationary Suggestions: Disappointing dollar data spurred buying in the EURUSD major currency pair leading to some imminent spillover into the subsequent crosses.  As a result, coupled with a pullback in crude oil contracts, fluctuations to the upside could be seen in the EUR/CAD cross.  Although rising to above $64 a barrel in the early morning trading session, the commodity for May delivery fell through the price level as profit taking ensued ahead of the weekend.  As a result, with the contracts likely closing lower around the $63.75 figure, currency traders took to the side of the Euro in bidding the cross up.  Attributed to the turn from yesterday's decline, the market saw positive figures in the overall German consumer price index and the import price survey.  Although consumer prices dropped in line with a consensus 1.9 percent climb, still hovering the 2 percent target, the figure remains suggestive that tightening bias looks to continue.  Bolstering the notion were import prices that rose 0.4 percent higher on the month, above the 0.2 percent expected by the consensus.   As a result, further momentum looks to trail off as we head into the close, but looks to remain as the clear technical break may lend to some upside opening potential.

AUD/NZD

Kiwi GDP Contracts, Bolsters Aussie: Plenty of downside evidence lingering over the New Zealand economy helped traders bid the AUD/NZD cross with ease.  Released last night, gross domestic product for the region contracted at a 0.1 percent pace, compared to an incremental 0.2 percent expected by the consensus.  With inflationary pressures still high in the economy and a widening deficit, almost constituting 9 percent of overall GDP, there is little left to convince the market and central bank officials in keeping the current rate of interest.  Although a cut would indefinitely cause further inflation, the effort may be worth the trouble as the economy struggles to cope with a flagging output environment and trailing domestic consumption.  Comparatively, the Australian economy is somewhat on a better footing.  Although manufacturing continues to lag behind, consumers remain healthy and optimistic as inflation remains a nonstarter.  As a result, with a pessimistic New Zealand infrastructure and potentially cut overnight cash rate, money flowed into Aussie denominations.  Further momentum looks to ensue, although minimal, as the cross has broken technical resistance heading into the close.

AUD/JPY

Positive Sales Figures Underpin Yen Momentum: An example of the potential shift out of carry trades, the AUD/JPY currency cross came under selling pressure during the session with positive numbers being released out of the Japanese economy.  Expected to continue the decline, supermarket sales and nationwide department sales gave hope to rising speculation of a near term rate hike by the Bank of Japan.  Declining less than expected in the month of February supermarket sales dipped 1.7 percent.  Although still to the downside, the current figure was an improvement from the 2.5 percent decline seen in January.  However, giving the most lift was the month's department store sales.  Reversing the 0.4 percent decline, sales jumped 0.5 percent higher.  Although not readily affecting the upcoming monthly decision, the figure lends further confirmation to the fact that the economy is on the up and up.  Subsequently, with consumer spending higher and adding to overall growth, inflationary pressures may not be far behind. 

Richard Lee is a Currency Strategist at FXCM.