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Hopes surrounding US-China Trade Developments Lead to Risk-Sentiment Boost

Pound News: UK Economic Uncertainties and Brexit Keep Pressure Up on Sterling

As Monday’s UK data showed major contractions and worsened concerns about Britain’s economic outlook, the Pound continued to remain unappealing yesterday. Investors were hesitant to make any big moves on the Pound ahead of upcoming data and potential Brexit developments.

Brexit uncertainties have been among the primary causes of weaker UK economic activity, but slowing global growth has also had an impact on Britain’s economy.

Any surprising Brexit developments could influence the Pound today. Meanwhile, the latest UK inflation figures could cause Bank of England (BoE) interest rate cut bets and Pound weakness if they disappoint.

 

Euro News: Eurozone Economic Jitters Limit Euro Strength

The Euro gained versus the Pound at the beginning of the week due to weak UK data, but weakness in Eurozone data and concerns that Germany is headed towards a recession limited the Euro’s potential for gains.

Investors have had no reason to buy the Euro this week so far besides weakness in rivals. The shared currency benefitted a little from weakness in its rival, the US Dollar, yesterday.

Eurozone December industrial production stats will be published today. If they beat expectations they will give investors more of a reason to buy the Euro and the currency could find stronger support.

 

US Dollar News: US-China Trade Hopes Douse Safe Haven Demand

On Monday, US-China trade negotiations finally resumed. While there are concerns that time is running out for the US and China to reach agreement, hopes that a deal could be reached rose due to comments from officials.

US President Donald Trump indicated he was eager to meet Chinese President Xi Jinping soon, bolstering hopes that a deal was in sight. As this news made investors less hesitant to take risks, it left safe haven currencies like the US Dollar less appealing.

As well as further developments in US-China trade negotiations, US Dollar investors are keeping an eye out for today’s US inflation stats. If they beat forecasts it could bolster Federal Reserve interest rate hikes and US Dollar demand.

 

Canadian Dollar News: Surging Oil Prices Keep GBP/CAD Tumbling

The Pound’s attempts to rebound from Monday’s losses yesterday were limited, as the Canadian Dollar benefitted from market demand for riskier currencies as well as stronger demand for oil.

Oil prices surged 2% on Tuesday, thanks to OPEC-led oil production cuts. With oil production being cut, oversupply is expected to lessen and this has left the commodity stronger.

No notable Canadian data will be published today, leaving the currency to be influenced by shifts in oil prices and other factors influencing risk-sentiment such as US-China trade negotiations.

 

Australian Dollar News: US-China Trade Hopes Bolster Risky Australian Dollar

Following last week’s tumble on risk-aversion and Reserve Bank of Australia (RBA) interest rate cut bets, the Australian Dollar has seen stronger demand this week so far. It has largely benefitted from higher demand for risky trade-correlated currencies.

As markets became hopeful that US-China trade negotiations could lead to a deal being reached soon, and the latest Australian business confidence data beat expectations, the Australian Dollar saw stronger demand.

Australian Dollar investors will be reacting to Australian consumer confidence data from Westpac today, as well as any fresh developments in US-China trade negotiations.

 

Upcoming Data

Wednesday, 13th February

09:30    UK Inflation Rate

10:00    Eurozone Industrial Production

13:30    US Inflation Rate

 

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

 

Adam Wiffen

Senior Currency Broker

aww@fcgworld.co.uk

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