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Dovish Draghi Limits Euro Exchange Rate Upside

Pound News: Sterling Benefits as BoE Dove Turns Hawkish

Demand for the Pound (GBP) picked up sharply in response to the latest comments from Bank of England (BoE) Deputy Governor David Ramsden.

As Ramsden noted that he sees the case for interest rates to rise ‘somewhat sooner rather than somewhat later’ this appeared to boost the odds of a May rate hike, pushing GBP exchange rates higher.

However, with speculation over Brexit mounting in anticipation of Theresa May’s latest speech on the subject the Pound still looks rather vulnerable.

 

Euro News: Markets Unsurprised by Draghi Dovishness

There was little surprise that European Central Bank (ECB) President Mario Draghi maintained his relatively dovish outlook on monetary policy in an appearance before the European Parliament.

Even so, Euro (EUR) exchange rates were able to hold onto a largely positive footing on Monday thanks to the relative weakness of the US Dollar.

With forecasts pointing towards another dip in the German consumer price index, though, the mood towards the single currency is likely to sour this morning.

 

US Dollar News: USD Jittery Ahead of First Comments From Fed Chair Powell

Investors were not impressed by comments from St Louis Fed President James Bullard, who expressed concern over the haste with which the central bank is approaching interest rate hikes.

This drove the US Dollar (USD) onto the back foot again, trending lower across the board as confidence in the prospect of four 2018 interest rate hikes diminished somewhat.

New Fed Chair Jerome Powell’s appearance before Congress could put further pressure on USD exchange rates, unless he takes a more optimistic stance.

 

Canadian Dollar News: NAFTA Concerns Weigh on CAD Exchange Rates

As the latest round of talks over the renegotiation of NAFTA got underway this left the Canadian Dollar (CAD) lacking in any particular support.

The continued weakness of the oil market also weighed on CAD exchange rates at the start of the week, muting the impact of an improved sense of general market risk appetite.

Tonight’s Budget could provoke further volatility for the Canadian Dollar, although this may not be enough to shore up the risk-sensitive currency.

 

Australian Dollar News: Lack of Domestic Data Limits AUD Momentum

The departure of former Deputy Prime Minister Barnaby Joyce did little to impact the Australian Dollar (AUD) yesterday, with political jitters largely fading.

While the odds of a more aggressive US monetary tightening cycle diminished this was not enough to shore up AUD exchange rates across the board.

With domestic data thin on the ground this week the ‘Aussie’ may struggle to find any particular direction against its rivals.

 

Upcoming Data

Tuesday, 27 February

13:30     German Consumer Price Index

13:30     US Advance Goods Trade Balance

13:30     Durable Goods Orders

21:00     Canadian Finance Minister Morneau Delivers Budget

 

James Spurway

Currency Dealer

01442 892 070

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