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Euro Slumps on German Recession Fears, ‘Aussie’ Plummets on RBA Rate Cut Bets

 

Pound News: Sterling Edges Away from Weekly Lows on Brexit Delay Speculation

The Pound has spent most of the week so far tumbling, as weaker UK data and Brexit uncertainties left investors anxious about the future of Britain’s economy.

Sterling was able to rebound slightly against most major rivals yesterday though. Britain’s opposition Labour Party urged the government to delay the Brexit process, bolstering hopes that support is rising for the possibility of avoiding a no-deal outcome.

The Bank of England (BoE) will hold its February policy decision today. The bank is not expected to make any shifts on monetary policy, but if it surprises investors with its policy or Brexit outlook the Pound is likely to be influenced.

 

Euro News: Fears Rise of German Recession Following Factory Data

The Euro tumbled yesterday, as investors became more concerned that the Eurozone’s biggest economy could be headed towards recession.

Germany’s December factory orders figure came in with a worrying contraction of -1.6% rather than the expected 0.3%. Germany’s January construction PMI disappointed too. In response, even more analysts argued that Germany was heading towards a recession.

With German recession fears rising, German data will take focus towards the end of the week. Today’s industrial production stats could drive the Euro today as investors await trade data due tomorrow.

 

US Dollar News: US Dollar Holds Ground on Risk Aversion and US Trade Stats

The Pound was unable to recover much versus the US Dollar yesterday. As investors sold risky currencies due to Reserve Bank of Australia (RBA) jitters, demand for safe haven currencies like the US Dollar rose.

The US Dollar was more easily able to hold this week’s gains on the Pound due to some strong US trade stats published during the American session. The US trade balance from November saw the deficit narrow more than expected, to $-49.3b.

US Dollar investors will be reacting to this morning’s speech from Federal Reserve President Jerome Powell, as well as this afternoon’s upcoming US jobless claims report.

 

Canadian Dollar News: Risk-Aversion and Oil Price Weakness Causes CAD Drop

The Pound to Canadian Dollar exchange rate saw a solid rebound yesterday despite a lack of major demand for the Pound. The Pound was more easily able to gain as market risk-aversion weighed on the Canadian Dollar.

As well as surprise dovishness from the Reserve Bank of Australia (RBA), risk-sentiment was limited due to weakness in commodities like oil. Oil is Canada’s most lucrative commodity so this kept pressure on the Canadian Dollar.

No notable Canadian data will be published today, leaving Canadian Dollar investors to react to shifts in risk-sentiment and anticipate tomorrow’s Canadian job market report.

 

Australian Dollar News: Reserve Bank of Australia’s (RBA) Dovish Shift Causes ‘Aussie’ to Plummet

The Pound to Australian Dollar recovered all of this week’s losses and then some yesterday, as dovish comments from Reserve Bank of Australia (RBA) Governor Philip Lowe caused the Australian Dollar to see broad-based losses.

Despite the RBA taking a seemingly neutral stance earlier in the week, Governor Lowe said on Wednesday that the chances of a rate cut had become just as likely as the chances of a hike, due to the recent rise in downside risks.

With RBA rate cut bets rising there is little reason for the Australian Dollar to recover in the coming days. However, if traders find risky investments more appealing this could cause GBP/AUD to slip.

Upcoming Data

 

Thursday, 7th February

00:00    Fed Chairman Powell Speech

07:00    German Industrial Production

07:45    French Trade Balance

09:00    ECB Economic Bulletin

12:00    Bank of England (BoE) Policy Decision

13:30    US Jobless Claims

 

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

 

Jack Wiles

Affiliate Account Manager

JSW@fcgworld.co.uk

 

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