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Pound Falls as EU Withdrawal Treaty Draft Disappoints Markets

Pound News: Jitters Likely on Consumer Credit Data

The publication of the first draft of the EU withdrawal treaty left Pound (GBP) exchange rates under significant pressure.

While chief EU negotiator Michel Barnier maintained that there were ‘no surprises’ within the proposed treaty this did little to reassure investors, who continued to pile out of the Pound.

A stronger UK net consumer credit figure could offer GBP exchange rates a rallying point this morning, though, if signs point towards greater domestic optimism.

 

Euro News: ECB Dovishness Cemented by Weaker Eurozone Inflation

Unsurprisingly, the Eurozone consumer price index dipped to 1.2% on the year in February, following Tuesday’s disappointing German inflation data.

This left the Euro (EUR) on a weaker footing against its rivals, although the negative impact of the data was somewhat limited by an unexpectedly improved French gross domestic product figure.

With the Eurozone unemployment rate forecast to have dipped further in February there is the potential for greater Euro strength today.

 

US Dollar News: Powell Commentary Continues to Benefit USD

The more hawkish tone of Fed Chair Jerome Powell’s comments continued to support US Dollar (USD) exchange rates yesterday, with markets still pricing in higher odds of four 2018 interest rate hikes.

As a result, reaction to the unexpected downward revision of the fourth quarter US gross domestic product proved a little more muted.

However, another downside disappointment from this afternoon’s personal consumption expenditure data may be enough to return the US Dollar to a downtrend.

 

Canadian Dollar News: Softening Global Demand Dents Oil Prices

While January’s Canadian industrial product price index showed a rebound on the month this still fell short of forecast, limiting the scope for Canadian Dollar (CAD) exchange rate strength.

Signs of weaker factory activity in the three major oil consuming economies put additional pressure on crude prices on Wednesday, further eroding the appeal of the Canadian Dollar.

Any softening in the Canadian manufacturing PMI is likely to add to the bearish mood of CAD rates, with confidence in the domestic outlook still limited.

 

Australian Dollar News: AUD Downside Limited Despite Underwhelming Data

Although the Australian private sector credit data failed to strengthen as far as expected this did not weigh particularly heavily on Australian Dollar (AUD) exchange rates yesterday.

The downside potential of the ‘Aussie’ was generally limited thanks to its recent bearish run, even though concerns remain over the likelihood of the Reserve Bank of Australia (RBA) raising interest rates in the coming months.

Ahead of the weekend, however, AUD exchange rates may struggle to find any particular upside momentum unless market risk appetite improves materially.

 

Upcoming Data

Thursday, 1 March

09:30    UK Net Consumer Credit

10:00    Eurozone Unemployment Rate

13:30    US Personal Consumption Expenditure

14:30    Canada Manufacturing PMI

21:00    New Zealand ANZ Consumer Confidence Index

Jessica Coot

Currency Dealer

01442 892063

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