Bank of England (BoE) News Weighs on Pound, US Dollar Steady

Pound News: Mixed Moves on UK Data and Bank of England Developments

Sterling was able to keep most of Monday’s Brexit-inspired gains as the week continued, but the British currency was knocked slightly from its best levels as investors digested the latest Bank of England (BoE) news.

The BoE confirmed that BoE Governor Mark Carney’s term would be extended until January 2020 to ensure a smooth Brexit transition. However, investors had hoped for a longer extension for Carney, so this was seen as an underwhelming outcome. Sterling avoided further losses on news that UK wage growth rose more than expected.

There won’t be much in the way of influential UK data today, so Brexit negotiations will remain in focus.


Euro News: Solid Eurozone Data Helps EUR Hold Ground

The Euro was able to regain some of Monday’s losses versus the Pound as Sterling was sold on Bank of England (BoE) news while the Euro benefitted from Tuesday’s Eurozone economic data.

The Eurozone’s Q2 employment change report met expectations quarter-on-quarter, but the yearly figure unexpectedly improved to 1.5%. ZEW’s September economic sentiment survey stats beat forecasts in every major print, slightly lightening concerns about US-EU trade jitters.

Euro movement is unlikely to change significantly today, but the shared currency could be influenced slightly by July’s Eurozone industrial production results.


US Dollar News: Safe-Haven Demand Keeps US Dollar Steady

The Pound to US Dollar exchange rate fell back from its best levels in a month on Tuesday, as Bank of England (BoE) news dented the Pound and the US Dollar remained relatively appealing due to market demand for safe-haven currencies.

Trade tensions between the US and China continue to worsen, with the US threatening to put tariffs on almost all US imports of Chinese goods, and China reportedly planning to ask the World Trade Organisation (WTO) for permission to impose sanctions on the US. US Dollar demand had been slightly limited by fears of US-Japan trade tensions however.

Market risk-sentiment and safe-haven demand is likely to remain the primary driver of US Dollar movement today, with August’s US PPI results unlikely to be particularly influential.


Canadian Dollar News: Anticipation for US-Canada Trade Talks Keeps CAD Buoyed

Investors largely brushed over Canada’s August housing starts report on Tuesday, even though the data fell short of forecasts. This was because markets were more focused on anticipated developments in US-Canada trade talks.

Hopes that North American Free Trade Agreement (NAFTA) renegotiations could see results kept the Canadian Dollar steady on Tuesday, but concerns remain that US-Canada trade talks could still fall through.

Potential developments in US-Canada trade talks, or other US trade developments, are most likely to influence the Canadian Dollar today as Canada’s Q2 capacity utilisation report is unlikely to be particularly influential.


Australian Dollar News: Risk-Aversion Keeps AUD Under Pressure

The Australian Dollar was unable to benefit from a weaker Pound on Tuesday, as investors remained hesitant to buy risky trade-correlated currencies like the Australian Dollar amid worsening US-China trade tensions.

As well as fears of an escalating US-China trade war, the Australian Dollar was also weighed by Tuesday’s Australian business confidence data from NAB, which fell short of forecasts.

US trade protectionism news will remain the primary driver of Australian Dollar movement today, but reaction to Westpac’s Australian consumer confidence survey data from September could prove influential too.


Upcoming Data

Wednesday, 12th September

01:30    Australian Westpac Consumer Confidence

10:00    Eurozone Industrial Production

13:00    US PPI


Joe Mayhew

Currency Dealer

[email protected]