Pound Sterling (GBP) Exchange Rates Gain on Services PMI
Pound Sterling (GBP) exchange rates strengthened across the board on Monday in reaction to a better than forecast UK services PMI. The gauge of output improved from 53 to 54.5 in February, beating the expected reading of 53.3.
Markit economist Chris Williamson said of the result: ‘With Bank of England policymakers sounding hawkish even following the January fall in the PMI to a one-and-a-half year low, the February upturn in the surveys surely leaves a May rate hike very much in play.’
As the services sector accounts for over 70% of total GDP, the Pound was boosted by the report and closed the European session higher against the Euro and Australian, New Zealand and US Dollars.
While there’s no high-profile UK data on the calendar today, there’s a speech from the Bank of England’s chief economist to look out for this evening. Any hint that borrowing costs could increase in May would be Pound-supportive.
Euro (EUR) Exchange Rates Sturdy Despite Poor Data
While Services and Composite PMI stats for the Eurozone disappointed forecasts on Monday, the Euro held its own against most the majors. The common currency wasn’t fazed by political concerns in the aftermath of the weekend’s Italian general election and recorded gains against higher-risk currencies like the Australian and New Zealand Dollars.
Today’s Eurozone retail PMI could boost the Euro if it shows an uptick in consumer spending.
US Dollar News: Non-Manufacturing Data Lifts USD
The US Dollar softened against the Pound on Monday but otherwise performed well thanks to a smaller-than-forecast reduction in the US non-manufacturing PMI. While the index had been expected to weaken to 59 points, it instead came in at 59.5. The result kept hopes for a March interest rate increase from the Federal Reserve very much alive, and lifted the US Dollar in the process.
A speech from Federal Reserve official William Dudley could move the US Dollar later today, but only if he offers up any surprises in relation to the future path of monetary policy.
Canadian Dollar (CAD) Down on NAFTA Developments
US President Donald Trump tweeted about his dissatisfaction with the North American Free Trade Agreement (NAFTA) on Monday and triggered broad-based losses for the Canadian Dollar.
Concerns that Canada will be left disadvantaged by any alterations to the agreement are liable to keep the Canadian Dollar under pressure in the days ahead.
RBA Speculation Leaves Australian Dollar (AUD) Exchange Rates Struggling
The Australian Dollar (AUD) had a disappointing start to the week, with speculation surrounding the latest policy announcement from the Reserve Bank of Australia (RBA) leaving the ‘Aussie’ weaker against most the major currencies. Today’s Australian construction index could bolster demand for the Australian Dollar if it shows improvement, but investors will also be focusing on a speech from RBA Governor Philip Lowe.
Tuesday, 05 February
08:30 EUR Markit Germany Construction PMI
09:10 EUR Markit Germany Retail PMI
15:00 USD Factory Orders
15:00 USD Durable Goods Orders
18:15 BoE’s Haldane Speaks at an Event in London
21:30 AUD AiG Performance of Construction Index
21:35 AUD RBA Governor Lowe Gives Speech in Sydney
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