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Brexit Jitters Cause Pound Volatility, US Retail Sales in Shock Drop

Pound News: Pound Jittery amid Day of Brexit Debate

Demand for the Pound fluctuated yesterday as investors became anxious during the latest UK Parliament debate over the Brexit process.

Hopes that there could be some positive developments were limited throughout the day, and in the afternoon the Pound tumbled on fears that the government’s position could be defeated once again.

Pound investors are likely to continue to react to Brexit developments today, and Britain’s upcoming UK retail sales report could prove influential if it surprises investors.


Euro News: Weak German Growth Limits Euro Demand

Yesterday saw the publication of Q4 Gross Domestic Product (GDP) growth rate projections for both Germany and the Eurozone. While the Eurozone’s overall growth projections met expectations, Germany’s figures fell short, highlighting concerns about Germany’s economic slowdown.

Germany’s figures slowed from 1.1% to 0.6% year-on-year, and edged higher from -0.2% to 0.0% month-on-month. The figure was expected to rise to 0.1%, but some investors found relief that Germany hadn’t fallen into recession. This helped the Euro climb against the Pound.

The Eurozone’s December trade balance report will be published today, but Euro investors may be more likely to anticipate next week’s German confidence and inflation stats before moving on the shared currency.


US Dollar News: US Dollar Tumbles on Shocking Retail Sales Slump

The US Dollar struggled to fully capitalise on a mixed Pound yesterday, as the latest US data weighed heavily on demand for the US currency. US jobless claims and retail sales stats were both worse than analysts expected.

In particular, investors were shocked with December’s US retail sales results. The sector contracted at a concerning -1.2% month-on-month rather than rising at 0.2%. The yearly figured slowed from 4.1% to 2.3%.

US confidence data from Michigan University will be published today, as well as export and import prices, in addition to manufacturing and industrial production stats from January. These could knock USD lower if they disappoint.


Canadian Dollar News: GBP/CAD Rebounds despite Brexit Jitters

While the Pound spent much of yesterday’s session slumping on Brexit uncertainties, the Pound to Canadian Dollar exchange rate was able to advance. This was because Canada’s latest data disappointed investors.

Canada’s new housing price index remained at a stagnant 0.0% as expected, while manufacturing sales unexpectedly contracted at -1.3% rather than rising to the forecast 0.2%. This left the Canadian Dollar as one of yesterday’s worst-performers.

Today’s American session will see the publication of Canada’s December motor vehicle sales and ADP employment change figures from January. If they beat expectations they could give the Canadian Dollar stronger support.


Australian Dollar News: US-China Trade Hopes Bolster AUD

Demand for the relatively risk-correlated Australian Dollar was strong yesterday, as the latest US-China trade developments left investors more willing to take risks.

US President Donald Trump has indicated that the deadline for trade talks could be extended by around 60 days if there is the promise of a trade deal on the horizon. With high-level talks taking place towards the end of the week, hopes are rising that a trade deal can be forged.

No notable Australian data will be published today, leaving investors to react to potential developments in US-China trade talks until markets close for the week.


Upcoming Data

Friday, 15th February

09:30    UK Retail Sales

10:00    Eurozone Trade Balance

13:30    Canadian ADP Employment Change

13:30    US Export and Import Prices

13:30    US NY Empire State Manufacturing Index

14:15    US Manufacturing and Industrial Production

15:00    US Michigan University Consumer Sentiment


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To keep up to date with the Euro, visit the EUR blog in our Currency News section.


David Worthington

Associate Director

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