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US Dollar Loses Ground on Global Stock Market Recovery

Pound News: Hawkish BoE Comments See Limited Impact

Bank of England (BoE) policymaker Gertjan Vlieghe made rather hawkish comments yesterday, offering a boost to the Pound (GBP).

However, while investors were initially pleased by Vlieghe’s upbeat attitude towards the prospect of another interest rate hike GBP exchange rates soon returned to a downtrend, thanks to Brexit worries.

Further weakness could be in store for the Pound today if January’s consumer price index shows an easing in UK inflationary pressure.

 

Euro News: Jitters Over German Coalition Deal Remain

Although SPD leader Martin Schulz stepped aside and renounced any ministerial ambitions markets are still jittery over the prospect of the SPD membership rejecting the proposed coalition deal with Angela Merkel’s CDU/CSU.

Even so, the Euro (EUR) was able to make gains against many of the majors on Monday, capitalising on the weakening of the US Dollar (USD).

With anticipation building for tomorrow’s raft of Eurozone gross domestic product figures, though, EUR exchange rates look rather vulnerable.

 

US Dollar News: USD Suffers as Global Stocks See Modest Recovery

With global stock markets recovering some ground in the wake of last week’s correction the mood towards the US Dollar (USD) turned rather sour.

As the impact of an imminent Federal Reserve interest rate hike has been effectively priced into USD exchange rates their ability to strengthen has been hampered.

Still, an improvement in the NFIB small business optimism index could help to put a floor under the US Dollar in the near term.

 

Canadian Dollar News: OPEC Production Forecast Weighs on Oil Prices

Markets were not impressed by the latest OPEC forecasts, with the organisation predicting that US production will continue to surge over the course of the year.

This naturally kept the commodity-correlated Canadian Dollar (CAD) under pressure, adding to the bearishness that followed Friday’s disappointing labour market data.

As a significant turnaround in the oil markets looks unlikely to materialise any time soon the strength of CAD exchange rates is expected to remain limited.

 

Australian Dollar News: Commonwealth Bank Forecasts Further AUD Gains

The Commonwealth Bank released forecasts pointing towards Australian Dollar (AUD) exchange rates trending higher in the coming months.

An uptick in Australian credit card balances in December also encouraged AUD demand, improving confidence in the underlying health of the domestic economy.

Should tonight’s Westpac consumer confidence index prove similarly positive the Australian Dollar may well be shored up further.

 

New Zealand Dollar News: Risk Appetite Failed to Benefit NZD Exchange Rates

While New Zealand credit card spending showed a strong improvement on the month in January, jumping 1.4%, this failed to boost the New Zealand Dollar (NZD) for long.

Even with market risk appetite generally picking up investors maintained a relatively bearish view of NZD exchange rates, given that the Reserve Bank of New Zealand (RBNZ) looks set to remain on hold for the foreseeable future.

If January’s food price index offers further evidence of easing inflationary pressures the New Zealand Dollar is likely to extend its losses today.

 

Upcoming Data

Tuesday, 13 February

09:30     UK Consumer Price Index

11:00     US NFIB Small Business Optimism

21:45     New Zealand Food Price Index

23:30     Australian Westpac Consumer Confidence

 

David Worthington 

Currency Dealer

01442 892 079

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