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More Hawkish Fed Minutes Boost USD on Hopes for Four 2018 Interest Rate Hikes

Pound News: Surprise GDP Revision Weighs on Sterling

Unexpectedly, the second estimate of fourth quarter UK gross domestic product saw a downward revision from 0.5% to 0.4% on the quarter.

As a result, the Pound (GBP) slumped sharply on Thursday, with this weaker growth likely to put at least something of a brake on the Bank of England’s policy outlook.

Speculation over Brexit is likely to keep GBP exchange rates under a degree of pressure today, with markets still lacking any real sense of clarity over the issue.


Euro News: ECB Minutes Highlight Division Amongst Policymakers

January’s European Central Bank (ECB) meeting minutes highlighted the increasing sense of division amongst policymakers, raising hopes that a return to a monetary tightening bias could soon be on the cards.

This helped to limit the downside potential of Euro (EUR) exchange rates yesterday, even after a disappointing German IFO business sentiment survey.

If the Eurozone consumer confidence index is confirmed to have dipped to 1.3% on the year in January, though, the appeal of the Euro is likely to deteriorate once again.


US Dollar News: Fed Minutes Prove More Hawkish Than Forecast

The latest Federal Open Market Committee (FOMC) meeting minutes proved to be a little more hawkish than investors had anticipated, to the benefit of the US Dollar (USD).

However, USD exchange rates ultimately failed to maintain their bullish run throughout trading on Thursday, in spite of solid domestic data.

Fresh commentary from Fed policymakers will be in focus today, having the potential to trigger renewed US Dollar gains.


Canadian Dollar News: Retail Sales Contraction Exacerbates CAD Softness

Confidence in the Canadian economy was further eroded as December’s retail sales data revealed a -0.8% contraction on the month.

As consumer spending eased over the crucial festive period this did not encourage any optimism in the domestic outlook, prompting the Canadian Dollar (CAD) to extend its downtrend further.

Any disappointment from this afternoon’s consumer price index data is likely to increase the pressure on CAD exchange rates.


Australian Dollar News: ‘Aussie’ Recovered Ground In Spite of Fed Minutes

Although the Australian Dollar (AUD) initially saw losses on the back of the Fed meeting minutes the antipodean currency was nevertheless able to return to an uptrend yesterday.

Given AUD’s recent bearishness its downside potential was rather limited on Thursday, helping to limit the impact of the hawkish Fed message.

Even so, in the absence of any fresh Australian data AUD exchange rates look rather vulnerable in the near term.


Upcoming Data

Friday, 23 February

10:00     Eurozone Consumer Price Index

13:30     Canadian Consumer Price Index

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