Pound Sterling: GBP Static on BoE Rate Hike Speculation
On a relatively quiet day for UK economic news, the Pound has been trading in a narrow range against the Euro and US Dollar.
This lack of movement comes as GBP traders consider whether Bank of England (BoE) policymakers will commit to raising interest rates next Thursday.
A recent spate of poor economic data suggests that another rate freeze is incoming, but BoE policymaker Ben Broadbent has raised hopes by declaring that he is ‘undecided’ on how to act.
The Pound might fall against the Euro and US Dollar later this morning if Confederation of British Industry (CBI) distributive trade data shows a slowdown in UK retail activity.
Euro: EUR Trading Tightly on Mixed German Confidence Data
Today’s Euro exchange rate movement has included a minor advance against the Pound and the US Dollar; elsewhere, the single currency has held close to opening levels.
This lack of definitive EUR movement follows the release of German economic confidence readings for July, provided by statistics company Ifo.
Perceptions of the business climate have been better than expected, while the score for perceptions of current conditions has unexpectedly risen.
The score for future expectations has also beaten forecasts, falling from 98.5 points to 98.2 instead of the expected 98.1 reading.
These data releases haven’t been universally positive or negative, which explains the lack of notable Euro movement so far today.
Looking ahead, there could be imminent Euro gains when French unemployment benefit stats for June come out this morning.
Expectations are for a drop of -6.9k persons making jobless claims; such a result could boost the Euro due to its positive implications.
US Dollar: Tensions over EU White House Visit Limit USD Movement
The US Dollar has failed to get off the starting blocks today, trading tightly against the Euro, Pound and most other peers.
This limited movement is down to tensions ahead of a meeting between US President Donald Trump and European Commission President Jean-Claude Juncker.
Mr Juncker is expected to try and negotiate a truce on the current US-EU trade war, but expectations for a positive outcome are low.
An escalating trade war is expected to damage both US and EU economic growth, so no progress today could panic USD traders.
The US Dollar has a chance to advance later on today when crude oil stock data will be released over the afternoon.
Falling crude inventories could push the US Dollar higher, as this could increase crude oil prices to the benefit of US exporters.
Australian Dollar: AUD Slumps on Disappointing Inflation Rate Data
The Australian Dollar has fallen across the board today, declining by at least -0.3% against all of its regular currency peers.
This poor performance has been caused by annual Australian inflation rate figures, which showed below-forecast price growth in Q2 2018.
Although the year-on-year inflation rate rose from 1.9% to 2.1%, this missed the anticipated 2.2% printing.
As a result, AUD trader confidence has fallen on the belief that there is a lower chance of a Reserve Bank of Australia (RBA) interest rate hike this year.
Future Australian Dollar gains could be caused by this coming Tuesday’s building permits reading, if it shows 1.90% growth as forecast.
New Zealand Dollar: Surprise Trade Balance Deficit Drags NZD Down
Tuesday evening’s NZ trade balance data has lowered confidence among New Zealand Dollar traders today, causing exchange rate losses against most currency rivals.
The trade reading for June fell from a surplus of NZ$208m to a deficit of NZ$-113m, missing forecasts for a smaller reduction to NZ$200m.
There could be additional New Zealand Dollar losses on the horizon when the ANZ Roy Morgan consumer confidence reading comes out on Thursday evening.
This measurement of consumer sentiment levels during July is predicted to decline from 120 points to 119.
Canadian Dollar: CAD Steady as OECD Urges Tax Reform
Echoing other currency movements, the Canadian Dollar hasn’t made any major gains or losses against many of its currency peers today.
This comes after a warning from the Organisation for Economic Co-operation and Development (OECD) about Canadian tax policies.
OECD experts believe that US corporate tax cuts have reduced Canada’s competitiveness, suggesting a reformation of Canadian policy to increase business investment.
The rest of the current week will bring no major Canadian data, so CAD traders will be looking ahead to Tuesday’s GDP reading for future movement.
This previously showed minimal growth at 0.1% in April, so an acceleration for May’s reading could restore trader confidence and boost CAD.
The threat of a proxy war between the US and Iran in Iraq has pared back some of the recent gains of “risk-on” currencies.
Last update: 8 Jan, 2020
Both the Australian dollar and British pound sterling have had a hard time of late caught between the rock of the China/US trade war and the Brexit hard place.
Last update: 7 Jan, 2020
The RBA has cut Australian interest rates to a record low of 1 percent in an effort to boost inflation. The Australian dollar is slightly stronger following the widely expected decision but is expected to lose 5–7 percent of its value before year-end.
Last update: 7 Jan, 2020