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Stronger US Inflation Fails to Boost US Dollar

Pound News: IMF Strikes Cautious Tone on UK Outlook

Demand for the Pound (GBP) diminished once again on the back of the latest International Monetary Fund (IMF) assessment of the UK economy.

As the IMF noted that the country needs to address its weak productivity problem and improve its international competitiveness, in order to better weather the shock of Brexit, GBP exchange rates naturally retreated.

Speculation over Brexit looks set to remain the major driving force of Sterling movement today.


Euro News: Robust GDP Unable to Boost EUR

Although the fourth quarter Eurozone gross domestic product data proved encouraging, holding steady at growth of 0.6% on the quarter, this failed to shore up Euro (EUR) exchange rates.

With the German consumer price index confirmed to have contracted -0.7% on the month in January the likelihood of any imminent shift in the European Central Bank’s (ECB) policy outlook dimmed.

Even so, if the latest Eurozone trade balance shows a widening of the surplus this could help to bolster demand for the Euro this morning.


US Dollar News: Investors Shrug Off Stronger Consumer Price Index

Despite the US consumer price index surprising to the upside in January the mood towards the US Dollar (USD) remained generally bearish on Wednesday.

As this is not the Federal Reserve’s preferred measure of inflationary pressure, and it was accompanied by a surprise contraction in advance retail sales, investors saw little encouragement.

This afternoon’s raft of business and production data may offer USD exchange rates a rallying point, providing the world’s largest economy demonstrates fresh signs of strength.


Canadian Dollar News: Smaller Rise in US Oil Inventories Benefits CAD Rates

The appeal of the Canadian Dollar (CAD) improved somewhat yesterday in response to a smaller-than-expected build-up in US crude inventories.

With Brent crude breaking back above US$63 per barrel the commodity-correlated Canadian Dollar naturally strengthened, although its gains still looked rather fragile in nature.

Another strong showing from the latest Canadian existing home sales figure could shore up CAD exchange rates today.


Australian Dollar News: Dip in Consumer Confidence Dents ‘Aussie’

As the Westpac consumer confidence index for February showed a sharp contraction this prompted fresh concern over the outlook of the Australian economy.

Demand for the Australian Dollar (AUD) eased in response to the unimpressive showing, even though general market risk appetite was boosted by the rival US Dollar remaining under pressure.

Market confidence in AUD exchange rates could deteriorate further tonight if Reserve Bank of Australia (RBA) Governor Philip Lowe takes a more dovish tone on monetary policy.


New Zealand Dollar News: NZD Capitalises on Signs of Stronger Inflation

Improvements in both the latest food price index and Reserve Bank of New Zealand (RBNZ) 2-year inflation expectation prompted the New Zealand Dollar (NZD) to make strong gains across the board.

Together these results suggest that inflationary pressure within the New Zealand economy is not quite as sluggish as previously thought, although the chances of RBNZ action remain slim.

If the New Zealand manufacturing PMI also prints positively this could see NZD exchange rates continuing their uptrend today.


Upcoming Data

Thursday, 15 February

10:00     Eurozone Trade Balance

13:30     US Philadelphia Fed Business Outlook

14:00     Canadian Existing Home Sales

14:15     US Industrial Production

21:30     New Zealand Manufacturing PMI

22:30     RBA Governor Lowe Gives Testimony to Parliamentary Committee

Alastair Archbold

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