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Eurozone Economic Fears Continue to Deepen as US-China Developments Bolster Risk-Sentiment

Pound News: Slowing UK Inflation Dampens Pound Demand

The Pound benefitted from weakness in rivals yesterday, but its gains were limited as the latest UK data came in short of expectations and dampened Bank of England (BoE) interest rate hike bets.

Britain’s January Consumer Price Index (CPI) results came in short of expectations in both monthly and yearly prints. With UK price pressures lower and the economic outlook also weakening, investors are once again becoming anxious that the Bank of England could cut interest rates within the foreseeable future.

No notable UK data will be published today, meaning investors will be reacting to any potential Brexit developments. Investors are hoping that the government’s Brexit plan can be renegotiated enough to pass through Parliament.

 

Euro News: Eurozone Economic Activity Concerns and Spanish Political Concerns Rise

The Pound to Euro exchange rate regained many of its weekly losses yesterday. Investors sold the Euro following the latest disappointing data, as the Eurozone’s industrial production results from December showed surprisingly deep contractions.

Demand for the Euro was further pressured by fresh Eurozone political jitters, as Spain’s Parliament blocked the government’s budget plans. The news worsened concerns about Spanish political stability.

Today’s Eurozone data could be particularly influential, as German growth data from Q4 will be published. If Germany’s Q4 growth stats fall short of expectations then German recession fears could worsen and the Euro may be in for even further losses.

 

US Dollar News: US Dollar Fails to Capitalise on Rival Weakness amid US Data and Risk-Sentiment

Some mixed US inflation data, as well as rising demand for riskier trade-correlated currencies amid US-China trade developments, left the US Dollar unable to keep the Pound near its worst levels yesterday. The US Dollar is a safe haven currency, so it is less appealing during risk-on movement.

However, as the US Dollar is the Euro’s (EUR) biggest rival, and the Euro tumbled in reaction to Eurozone economic and political jitters, this kept the US Dollar fairly appealing and GBP/USD failed to advance far.

December’s anticipated US retail sales results will be published today. If they fall short of expectations they could worsen concerns about US consumer activity and weigh on the US Dollar.

 

Canadian Dollar News: Risk-Sentiment and Oil Prices Keep GBP/CAD from Recovering

After tumbling for most of this week so far, the Pound to Canadian Dollar exchange rate edged away from its weekly lows yesterday. However, while some investors sold the Canadian Dollar from its best levels its support remained strong and it didn’t slip far.

Oil continued to find support from OPEC’s production cut plans. Rising hopes that US-China trade talks would end well also supported the risky trade-correlated Canadian Dollar.

Canadian housing prices and manufacturing sales stats from December will be published today, but are unlikely to be as influential as potential US-China trade developments would be for the Canadian Dollar.

 

Australian Dollar News: Risk-Sentiment Keeps ‘Aussie’ Buoyant

The Australian Dollar has been able to sustain most of its weekly gains versus the Pound, thanks to a combination of stronger Australian confidence stats as well as higher demand for risky trade-correlated currencies.

As US President Donald Trump indicated he may delay an expected deadline for talks in the event negotiations go well, investors were more comfortable to take risks. The Australian Dollar was unable to hold its best levels though, as its rival the New Zealand Dollar (NZD) was one of the day’s most strongly-performing currencies.

Australia’s consumer inflation expectations stats from February could cause some Australian Dollar movement today, but US-China trade negotiations are likely to remain in focus.

 

Upcoming Data

Thursday, 14th February

00:00    Australian Inflation Expectations

06:30    French Unemployment Rate

07:00    German Growth Rate

10:00    Eurozone Growth Rate

13:30    Canadian New Housing Price Index

13:30    Canadian Manufacturing Sales

13:30    US Retail Sales

13:30    US Jobless Claims

15:00    US Business Inventories

 

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

 

James Spurway

Director Sales and Dealing

jas@fcgworld.co.uk

 

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