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Pound Slides With Disappointing Wage Growth, US Dollar Struggles Ahead of Fed Meeting

Pound News: Weak Wage Growth Limits Odds of BoE Interest Rate Hike

In another disappointing development for the UK economy growth in average weekly earnings was found to have slowed in the three months to April.

As inflation continues to erode the majority of wage growth the odds of an August interest rate hike from the Bank of England (BoE) appeared to diminish.

However, an uptick in the consumer price index today could offer fresh encouragement to BoE policymakers and Pound (GBP) exchange rates.

 

Euro News: Softening Eurozone Sentiment Failed to Dent Single Currency

The latest ZEW economic sentiment surveys did not paint the most encouraging picture of the domestic outlook, with the German expectation index sliding dramatically from -8.2 to -16.1.

Even so, this failed to put a dent in Euro (EUR) exchange rates yesterday, with markets still largely confident in the prospect of a more hawkish European Central Bank (ECB) meeting.

A solid showing from this morning’s Eurozone industrial production figures may encourage further gains for the single currency.

 

US Dollar News: Movement Limited Ahead of Federal Reserve Decision

US inflation continued to push higher in May, with the headline consumer price index picking up from 2.5% to 2.8% in line with forecasts.

This is likely to encourage the Federal Reserve to pursue a more aggressive pace of monetary tightening, with inflation still significantly above the central bank’s target.

However, with the impact of an imminent interest rate hike already effectively priced in by investors the upside potential of US Dollar (USD) exchange rates looks limited.

 

Canadian Dollar News: Trade Worries Continue to Drag on CAD Rates

Worries over the deteriorating trade relationship between the US and Canada continue to weigh on Canadian Dollar (CAD) exchange rates.

Even with oil prices pushing higher once again the Canadian Dollar was unable to find any particular support on Tuesday.

Another increase in US crude oil stockpiles could weigh heavily on CAD exchange rates, especially if the wider sense of market risk appetite also deteriorates.

 

Australian Dollar News: AUD Vulnerable to Dovish RBA Commentary

As Australian home loans saw a smaller contraction than forecast in April this helped to boost demand for the Australian Dollar (AUD).

This overshadowed a less encouraging NAB business confidence index, which highlighted a deterioration in domestic sentiment.

Ahead of the Federal Reserve policy decision the mood towards the Australian Dollar is likely to sour, though, as risk appetite diminishes.

 

Upcoming Data

Wednesday, 13 June

09:30     UK Consumer Price Index

10:00     Eurozone Industrial Production

19:00     Federal Open Market Committee Rate Decision

 

Thomas Taylor

Currency Dealer

tnt@fcgworld.co.uk

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