Pound News: BoE Rate Hike Hopes Support GBP Exchange Rates
A leaked cabinet report on Brexit dented Pound (GBP) exchange rates on Tuesday, with the document indicating that all three most likely Brexit scenarios will leave the economy worse off.
However, Sterling soon recovered from this knock, with markets encouraged by the latest comments from Bank of England (BoE) Governor Mark Carney.
With the odds of another imminent BoE interest rate hike rising the downside potential of GBP exchange rates looks somewhat limited in the near term.
Euro News: Disappointing German Inflation Dents Single Currency
While fourth quarter Eurozone gross domestic product data proved encouraging this failed to keep the Pound to Euro (GBP/EUR) exchange rate under pressure for long.
January’s German consumer price index data fell short of forecast, showing a contraction of -0.7% on the month and suggesting that inflationary pressure within the Eurozone’s powerhouse economy is easing.
A similarly disappointing showing from the corresponding Eurozone inflation data could see the Euro falter further this morning.
US Dollar News: USD Muted Ahead of Fed Policy Meeting
An unexpectedly strong uptick in the US consumer confidence index was not enough to rally US Dollar (USD) exchange rates on Tuesday.
Although this improvement points towards a stronger US economy investors were wary of buying into the US Dollar ahead of the 2018 State of the Union address.
Anticipation for tonight’s Federal Reserve policy meeting is likely to keep USD exchange rates under some degree of pressure, even though investors hope to see a more hawkish message.
Canadian Dollar News: Oil Price Slump Undermines CAD
Demand for the Canadian Dollar (CAD) remained weak as the oil market rout deepened, with investors wary of increasing US crude stockpiles.
In the absence of any particularly strong sense of market risk appetite there was little to support CAD exchange rates, even with the US Dollar weakening.
Even so, if tonight’s US oil inventories data shows a fresh drawdown this could help to improve the appeal of the Canadian Dollar.
Australian Dollar News: AUD Fails to Capitalise on Stronger Business Confidence
Even though the NAB business confidence index showed a solid improvement on the month Australian Dollar (AUD) exchange rates struggled to capitalise on this.
As markets braced for the latest Australian consumer price index data the Pound to Australian Dollar (GBP/AUD) exchange rate was able to hold onto an uptrend.
Another positive showing from January’s manufacturing PMI may offer the Australian Dollar a rallying point, however, if the economy shows signs of resilience.
New Zealand Dollar News: Sharp Rise in Exports Improves NZ Outlook
Investors were surprised to find that the New Zealand trade balance had returned to a state of surplus in December, fuelled by a sharp uptick in export volumes.
This encouraged greater confidence in the outlook of the domestic economy, offering a boost to New Zealand Dollar (NZD) exchange rates.
However, in the absence of any fresh domestic data the ‘Kiwi’ may struggle to hold onto any particular gains for long.
Wednesday, 31 January
08:55 German Unemployment Rate
10:00 Eurozone Consumer Price Index
13:30 Canadian Gross Domestic Product
19:00 Federal Reserve Rate Decision
22:30 Australian Manufacturing PMI
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