Pound Sterling: GBP Exchange Rates Steady between UK Wage and Inflation Data
The Pound (GBP) has made a minimal advance against the US Dollar today, but has otherwise held close to opening levels against peers including the Euro.
This lack of definitive movement is down to the morning’s UK wage growth data, which has revealed a slight slowdown in the pace of wage growth during May.
The figures are already being considered in the context of Wednesday’s UK inflation rate data, which is tipped to show price growth for the annual reading.
The Pound might make solid gains against currency peers if the inflation figures show growth, as higher inflation would put more pressure on Bank of England (BoE) policymakers to consider raising interest rates.
Euro: EUR Trades Poorly ahead of Potential US Dollar Rise
Today’s trading has seen the Euro tick higher against the US Dollar and trade in a narrow range against the Pound.
The Euro’s uninspiring movement today is partly because of a lack of notable Eurozone data, but also because of concerns that there could be a US Dollar rally this afternoon.
In the latter case, a stronger USD could lower demand for the single currency and turn its current middling movement into losses.
US Dollar: USD Steady ahead of Fed Powell Testimony
Like the Euro, the US Dollar has made limited movement so far today because of a data scarcity and tension ahead of the afternoon’s Fed speech.
Federal Reserve Chair Jerome Powell will be giving testimony today and on Wednesday and might cause the US Dollar to rally with his comments.
USD traders will be looking for any sign that there could be an interest rate hike in the coming months, to fit in with the expected four total rate hikes in 2018.
If Mr Powell does imply that higher interest rates are on the way then the US Dollar could rise sharply against the Pound and Euro this afternoon.
Australian Dollar: AUD Demand Limited after Cautious RBA Minutes
The Australian Dollar has held close to opening levels against the Pound, Euro and US Dollar today, with the latest economic data failing to support the AUD.
This has been Reserve Bank of Australia (RBA) minutes from their latest meeting, which have suggested a cautious outlook from RBA policymakers.
RBA officials are still concerned about high household debt levels, which are seen as a potential barrier to raising interest rates.
Although higher rates would improve returns on savings accounts, households with high debt levels might struggle because of increased repayment costs.
The Australian Dollar has a chance to recover in value on Thursday, when jobs market data for June will be released.
This is predicted to show 17k more persons in work but no change to the unemployment rate; higher employment and a surprise jobless rate decline could trigger an Australian Dollar advance.
New Zealand Dollar: NZD Strengthens on Inflation Rate Estimate
Today’s New Zealand Dollar movement has been positive, with the NZD rising across the board thanks to the latest inflation rate data.
Last night’s Q2 NZ inflation rate figures didn’t cause much excitement, but the New Zealand Dollar has since rallied because of Reserve Bank of New Zealand (RBNZ) inflation estimates.
RBNZ officials believe that inflation rose by 1.7% in the year to June, which would be the fastest pace of price growth since 2011.
Higher inflation increases the odds of an RBNZ interest rate hike, rather than a cut as some economists have previously predicted.
The New Zealand Dollar could rise further if this afternoon’s Global Dairy Trade price index shows higher dairy prices; these would support NZ dairy exporters.
Canadian Dollar: CAD Movement Limited ahead of Fed Testimony
The Canadian Dollar has traded cautiously today, mainly because of the risk of a rising US Dollar pushing the CAD down in value.
The CAD could make gains of its own this afternoon if manufacturing sales are reported higher; these are currently tipped to rise from -1.3% in May to 0.5% in June.
Currency rates were extremely volatile last week as the coronavirus situation worsened day by day with various countries implementing ever-tougher measures to stop the spread of the disease.
Last update: 23 Mar, 2020
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
Last update: 22 Feb, 2020
The strong start to the year for “risk-on” currencies is already a distant memory.
Posted: 3 Feb, 2020