UK and US Political Uncertainties Leave Currency Market Volatile

Pound News: Political Chaos Muddies Pound Outlook

The Pound was once again one of the worst performing major currencies yesterday. Investors continued to sell the currency amid concern that political deadlocks could mean months more Brexit uncertainty.

Reaction to this morning’s UK consumer confidence data from GfK is likely to take a backseat to further potential Brexit jitters for Pound investors today.

Euro News: EUR Investors Shocked by European Central Bank (ECB) Executive’s Resignation

The Euro was unable to capitalise on Pound weakness yesterday. Instead the Euro saw its own weakness as Germany’s member of the European Central Bank (ECB) Executive Board, Sabine Lautenschläger, announced she would resign from office by the end of October. Lautenschläger was the most hawkish banker on the board.

The Eurozone’s overall September business and consumer sentiment stats will be published today. If they beat forecasts they could offer the Euro some much-needed support at the end of a bearish week for the currency.

US Dollar News: USD Demand Limited as Political and Growth Uncertainty Persists

The US Dollar has been benefitting from safe haven demand and US-China trade hopes, but investors are hesitant to buy the currency too much. Concerns about an impeachment inquiry into US President Donald Trump, as well as US growth jitters amid a sharp contraction in business investment, weighed on USD yesterday.

US Personal Consumption Expenditure (PCE) inflation data will be published today. As this is the Federal Reserve’s preferred measure of inflation, it could influence Federal Reserve speculation and USD movement if it surprises.

Canadian Dollar News: Canadian Manufacturing Jitters Weigh on CAD

While the trade-correlated Canadian Dollar benefitted from US-China trade hopes yesterday, the currency’s gains were limited by concerns that the Bank of Canada (BoC) could take a more dovish stance soon. These concerns came amid warnings from analysts that Canada’s manufacturing sector could weaken on global trade tensions.

Trade developments will continue to drive CAD movement today, as investors await key Canadian growth rate data next week.

Australian Dollar News: US-China Trade Optimism Boost ‘Aussie’

The Australian Dollar saw strong demand yesterday and registered notable gains against the Pound, despite market uncertainty over whether or not the Reserve Bank of Australia (RBA) would cut Australian interest rates next week. This was due to fresh market optimism over US-China trade negotiations.

Still, as next Tuesday’s RBA decision approaches, the ‘Aussie’ may shed some of this week’s gains. Some analysts predict investors may still need to price in the high possibility of a rate cut.

Upcoming Data

Friday, 27th September

00:01    UK GfK Consumer Confidence

07:45    French Inflation Rate

10:00    Eurozone Business and Consumer Confidence

13:30    US Personal Consumption Expenditure (PCE) Inflation Rate

13:30    US Durable Goods Orders

15:00    US Michigan Consumer Sentiment

 

Alastair Archbold
Currency Trader
T: 01442 892 062