Pound News: Sterling Muted Ahead of BoE Decision
Confidence in the Pound (GBP) remained limited as markets adopted positions in anticipation of the Bank of England’s (BoE) February policy decision.
As the Halifax house price index contracted -0.6% on the month in January this marked the twenty-third consecutive month of deterioration, highlighting the continued weakness of the UK housing market.
The Pound may struggle to find any particular traction today, with fresh weakness possible if the BoE adopts a more cautious outlook on monetary policy.
Euro News: German Coalition Progress Fails to Boost EUR Exchange Rates
News of a breakthrough in German coalition talks was not enough to keep Euro (EUR) exchange rates from slumping on Wednesday.
While Angela Merkel’s CDU/CSU and the SPD have come to an agreement in principle the deal still needs to be approved by members of the SPD, meaning that it could still fall through.
Unless the European Central Bank (ECB) Economic Bulletin takes a more hawkish tone the mood towards the Euro is likely to remain muted.
US Dollar News: Risk Aversion Continues to Benefit US Dollar
The risk-off mood of investors kept the US Dollar (USD) on a stronger footing yesterday, even as global stock markets attempted to claw back some of their recent losses.
While comments from Federal Reserve policymakers proved mixed the odds of an imminent interest rate hike remain high, limiting the downside potential of USD exchange rates.
This afternoon’s jobless claims figures may extend the US Dollar’s gains, providing that they point towards continued tightening of the labour market.
Canadian Dollar News: Improved Canadian Housing Market Shores Up CAD
While oil prices remained under pressure, with Brent crude breaking below US$67 per barrel, the Canadian Dollar (CAD) was able to regain some ground.
Demand for the Canadian Dollar picked up on the back of a moderate rebound in building permits for December, encouraging greater confidence in the health of the domestic economy.
Similarly positive showings from today’s housing starts and new housing price index data may encourage further CAD gains.
Australian Dollar News: RBA Caution Keeps AUD on Back Foot
An uptick in the Australian construction PMI was not enough to shore up Australian Dollar (AUD) exchange rates, with the sector only accounting for a limited degree of domestic economic activity.
With markets still discouraged by Tuesday’s Reserve Bank of Australia (RBA) policy meeting investors see little particular cause for confidence in the risk-sensitive Australian Dollar.
If RBA Governor Philip Lowe takes a more cautious view of the policy outlook in a speech this morning AUD exchange rates could continue to shed ground.
New Zealand Dollar News: Poor Wage Growth Limits RBNZ Outlook
Although the fourth quarter New Zealand unemployment rate bettered forecast, unexpectedly falling to a nine-year low of 4.5%, this failed to substantially boost the New Zealand Dollar (NZD).
Focus instead fell on the disappointing average hourly earnings data, with wage growth found to have lost further momentum at the end of 2018.
With the Reserve Bank of New Zealand (RBNZ) looking set to leave interest rates on hold for the foreseeable future the appeal of NZD naturally remains limited.
Thursday, 8 February
09:00 European Central Bank Economic Bulletin
09:00 Reserve Bank of Australia Governor Lowe Speech
12:00 Bank of England Rate Decision
13:30 Canadian Housing Starts
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