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Central Bank Comments Limit Currency Market Movements

Pound News: Sterling Movement Limited by Stalling Brexit Talks

After a slight rebound from last week’s losses on Monday, the Pound’s movement was more mixed and modest yesterday as investors took a break from the currency.

Volatility in the Pound has dropped to its lowest levels in 16 months since the Brexit delay was announced, indicating that investors do not expect any major developments in the immediate future. Despite this, the Pound slipped lower in the afternoon on reports that negotiations between the government and the opposition Labour Party were stalling.

Unless today’s UK inflation report is particularly surprising it is unlikely to cause much Pound movement either. Investors looking for signs of resilience in UK economic activity will look ahead to tomorrow’s UK retail sales report.

 

Euro News: Eurozone Confidence Beats Forecasts but ECB Doubts Economic Rebound

Investors were hesitant to buy the Euro yesterday, despite continued indications that the Eurozone’s economic activity has been improving. ZEW’s latest Eurozone economic sentiment beat forecasts in its April print, and the latest Eurozone construction output was impressive too.

However, sources close to the European Central Bank (ECB) reportedly said that ECB policymakers had expressed doubts of a solid Eurozone economic rebound in the second half of the year, which limited Euro appeal yesterday.

Today’s Eurozone inflation report could be highly influential for ECB speculation if it surprises investors. A weaker inflation report could mean more losses for the Euro over the coming days.

 

US Dollar News: US Factory Data Continues to Show Signs of Economic Slowdown

While investors were hesitant to keep selling the US Dollar following the losses it had seen in recent weeks, the latest US data did little to bolster investor demand for the US currency.

US manufacturing and industrial production results largely fell short of forecasts in March. Many February prints were revised higher, but overall the data pointed towards US economic activity slowing.

Investors are now anticipating today’s US trade balance results and tomorrow’s retail sales data for further signs of how much the economy has been impacted by the global economic slowdown.

 

Canadian Dollar News: Canadian Manufacturing Misses the Mark

The Canadian Dollar saw mixed movement too during yesterday’s European session, as the currency was supported by higher demand for oil, Canada’s biggest export, but weighed by the latest Canadian data.

Manufacturing sales were expected to have slowed to a stagnant 0.0% in February, but instead contracted at a disappointing -0.2%. This was partially because the previous figure had been revised lower, from 1.0 to 0.8%.

Investors are hesitant to move too much on CAD ahead of today’s upcoming inflation and trade balance reports though, which could influence Bank of Canada (BoC) interest rate hike bets if they surprise investors.

 

Australian Dollar News: Reserve Bank of Australia (RBA) Reminds Markets of Dovish Tone

While Reserve Bank of Australia (RBA) Deputy Governor Guy Debelle has recently indicated that the bank will take a ‘wait and see’ approach on Australia’s economy rather than signalling an interest rate cut, the bank’s meeting minutes were still perceived as fairly dovish yesterday.

The bank indicated that if Australian inflation fails to improve or if the nation’s unemployment rate worsens, an interest rate cut will become more likely. It made analysts speculate that the bank could be planning a rate cut in the coming year and this left AUD weaker.

This morning’s Westpac leading index data is unlikely to be hugely influential as Australian Dollar investors will be eagerly anticipating tomorrow’s key job market report.

 

Upcoming Data

 

Wednesday, 17th April

02:30    Australian Westpac Leading Index

09:30    UK Inflation Rate

10:00    Eurozone Inflation Rate

13:30    Canadian Inflation Rate

13:30    Canadian Trade Balance

13:30    US Trade Balance

15:00    US Wholesale Inventories

 

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

 

Jack Wiles

Affiliate Account Manager

JSW@fcgworld.co.uk

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