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Euro Edges Higher on European Central Bank (ECB) Tone, US Dollar Slips as US Inflation Misses Expectations

Pound News: Sterling Static after BoE Decision

Investors had little reason to move on the Pound on Thursday, as this week’s Brexit news continued to offer the British currency some support while the latest Bank of England (BoE) news had little impact. This left Sterling to be driven by the strength of major rivals instead.

As was widely expected, the Bank of England left UK monetary policy unchanged. The bank noted that Brexit uncertainties and US protectionism were having a negative impact on UK business confidence and activity, which put a cap on Pound strength.

There will be no notable UK data published today, so unless there are some surprising Brexit developments the Pound may be static heading into the weekend.

Euro News: EUR Strengthens as European Central Bank (ECB) Sticks to Plans

Despite concerns that US trade protectionism is worsening and signs of a slowing Eurozone economy, the European Central Bank (ECB) remained confident in its inflation forecasts and this supported the Euro on Thursday.

ECB President Mario Draghi played down concerns about possible Eurozone contagion from recent issues in emerging markets, and the bank also confirmed that it would begin to withdraw its aggressive quantitative easing (QE) program in October.

Eurozone trade balance data from July will be published today and could influence the Euro if it affects US-EU trade jitters. The Eurozone’s Q2 wage growth stats will be published too, but investors are more likely to be looking ahead to Monday’s Eurozone inflation rate results.

US Dollar News: US Inflation Falls Short and Dampens Hopes for Hawkish Fed

Lower demand for safe haven currencies has weakened the US Dollar this week and Thursday’s US inflation report exacerbated the US Dollar selloff.

August’s US inflation rate fell short of expectations in every major print. The yearly inflation slipped from 2.9% to 2.7%, and the yearly core inflation rate unexpectedly slid from 2.4% to 2.2%. This dampened hopes that the Federal Reserve could ramp up the pace of its US interest rate hikes.

The US Dollar could still see some late-week movement today if key US retail sales results from August surprise investors. Industrial and manufacturing production stats, as well as Michigan University’s consumer sentiment projections, could also influence the US Dollar.

Canadian Dollar News: Trade Uncertainties Drag on CAD

The Pound to Canadian Dollar exchange rate climbed on Thursday, despite a lack of fresh reasons to buy the Pound.

Canadian Dollar investors were anxious about US-Canada trade talks. Reportedly, Canadian Foreign Minister Chrystia Freeland remained in Canada to do more preparation rather than return to Washington for trade talks.

As no notable Canadian data is expected today, Canadian Dollar movement will remain focused on trade developments.

Australian Dollar News: AUD Avoids Losses on Strong Australian Job Report

While global trade jitters helped the Pound recover against some other trade-correlated currencies like the Canadian Dollar on Thursday, the Australian Dollar avoided notable losses versus the Pound thanks to some solid Australian data.

Australia’s August job market report beat expectations in many notable prints, indicating strength in Australia’s job market and keeping the Pound to Australian Dollar exchange rate near the week’s opening levels.

 

Upcoming Data

Friday, 14th September

10:00    Eurozone Trade Balance

10:00    Eurozone Wage Growth

11:00    BoE Governor Carney Speech

13:30    US Import and Export Prices

13:30    US Retail Sales

14:15    US Industrial and Manufacturing Production

15:00    US Business Inventories

15:00   US Michigan Consumer Sentiment

 

Jack Wiles

Currency Dealer

jsw@fcgworld.co.uk

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