Pound News: Brexit Uncertainties Weigh on Sterling
The high level of uncertainty that still surrounds the UK government’s approach to Brexit kept Pound (GBP) exchange rates under pressure on Tuesday.
With markets concerned by the persistent lack of clarity over what the ultimate shape of the UK’s future relationship with the EU could be there was little reason to buy into Sterling.
As fresh domestic data remains lacking today the mood towards the Pound is unlikely to materially improve, unless there is some positive development regarding Brexit.
Euro News: Eurozone Retail PMIs Prove Unimpressive
January’s raft of Eurozone retail PMIs failed to impress, with growth found to have faltered across the board at the start of 2018.
This helped to weigh down Euro (EUR) exchange rates yesterday, even after the latest German factory orders figures highlighted persistent strength within the Eurozone’s powerhouse economy.
Speculation over the policy outlook of the European Central Bank (ECB) could continue to limit the appeal of the single currency, with monetary tightening still looking to be a relatively distant prospect.
US Dollar News: Investors Shrug Off Widened Trade Deficit
As global stock markets came under pressure, in response to rising bets on the prospect of more aggressive Federal Reserve monetary tightening, the US Dollar (USD) naturally benefitted.
However, USD exchange rates lost some of their bullish momentum in the wake of a disappointing US trade balance figure, with the deficit found to have widened further than forecast in December.
Commentary from Fed policymakers may temper the strength of the US Dollar, unless there are further signs of hawkish sentiment.
Canadian Dollar News: Rising Imports Encourage CAD Selling
December’s Canadian trade data failed to offer the Canadian Dollar (CAD) any particular rallying point, with a sharp rise in import volumes widening the deficit to -3.19 billion.
The general sense of market risk aversion and a stronger US Dollar gave investors further incentive to sell out of CAD, meanwhile.
Unless December’s building permits data shows a solid rebound on the month the mood towards the Canadian Dollar is likely to remain bearish today.
Australian Dollar News: AUD Exchange Rates Soften on RBA Message
Unsurprisingly, the Reserve Bank of Australia (RBA) maintained a rather cautious policy outlook at its February meeting, citing concerns over weak household consumption.
With the trade balance unexpectedly returning to a state of deficit in December there was little to recommend the Australian Dollar (AUD), given lingering concerns over the health of the domestic economy.
If market risk appetite deteriorates further this may drive additional losses for AUD exchange rates.
New Zealand Dollar News: Dairy Prices Push Higher Despite Risk Aversion
In spite of the wider sense of risk aversion gripping markets on Tuesday the New Zealand Dollar (NZD) was still able to trend higher across the board.
NZD exchange rates capitalised on a sharp uptick in the Global Dairy Trade index, which rose 5.9% on the fortnight as demand for the commodity continued to strengthen.
Even so, the New Zealand Dollar could be in for some softening tonight if the Reserve Bank of New Zealand (RBNZ) adopts a dovish stance.
Wednesday, 7 February
13:30 Canadian Building Permits
20:00 Reserve Bank of New Zealand Rate Decision
20:00 US Consumer Credit
01442 892 073