Pound News: Markets Relieved as Brexit ‘Punishment Clause’ Removed
As EU officials reportedly agreed to remove the so-called ‘punishment clause’ from the draft proposal for the Brexit transition period the mood towards the Pound (GBP) improved.
While a significant degree of uncertainty over Brexit remains this was not enough to prevent GBP exchange rates rallying solidly on Thursday, with hopes for the next phase of negotiations improving.
If this morning’s UK retail sales figures show a solid improvement on December’s data the Pound could extend its bullish run.
Euro News: Weak Spanish Inflation Casts Further Doubt on ECB Outlook
In an impressive development, France’s unemployment rate unexpectedly dipped from 9.6% to 8.9% in the fourth quarter, its lowest level since early 2009.
However, with the finalised Spanish inflation rate for January demonstrating a sharp contraction on the month the Euro (EUR) struggled to find any particular traction against its rivals yesterday.
As the European Central Bank (ECB) looks set to maintain a relatively dovish outlook on monetary policy for the foreseeable future the appeal of the Euro is unlikely to pick up in the near term.
US Dollar News: Rising Producer Prices Fail to Shore up USD Exchange Rates
Pressure continued to mount on the Federal Reserve as January’s producer price index bettered forecast, indicating that inflation within the US economy is building faster than expected.
Even so, this failed to shore up US Dollar (USD) exchange rates on Thursday, with the latest US production and capacity utilisation figures proving rather discouraging in nature.
With the University of Michigan consumer confidence index expected to dip on the month demand for the US Dollar could remain limited today.
Canadian Dollar News: CAD Dented by Surprise Home Sales Contraction
Investors were not impressed to find that Canadian existing home sales had contracted by -14.5% on the month in January, underlining the fragility of the domestic housing market.
As the oil market returned to a more bearish mood this left the Canadian Dollar (CAD) generally lacking in support, ceding back much of Wednesday’s gains.
Another underwhelming showing from this afternoon’s manufacturing sales figure may prompt CAD exchange rates to shed further ground.
Australian Dollar News: Mixed Labour Market Data Weighs Down AUD
While the headline Australian employment change figure bettered forecast the Australian Dollar (AUD) trended lower on Thursday.
This was due to the less impressive underlying details of the labour market report, with part time employment rising sharply on the month as the participation rate dipped.
All in all, the odds of the Reserve Bank of Australia (RBA) adopting a more hawkish stance in the coming months still look rather limited, to the detriment of AUD exchange rates.
New Zealand Dollar News: Improved NZ Home Sales Support ‘Kiwi’
As the REINZ house sales figure showed a modest rebound on the month the New Zealand Dollar (NZD) was encouraged to extend its upwards momentum.
The relative weakness of both the US Dollar and Australian Dollar helped to buoy the ‘Kiwi’ further, in spite of the odds of imminent Fed policy action remaining high.
Even so, NZD exchange rates remain vulnerable to any deterioration in the wider sense of market risk appetite.
Friday, 16 February
09:30 UK Retail Sales
13:30 Canadian Manufacturing Sales
15:00 US University of Michigan Consumer Sentiment Index