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USD Exchange Rates Return to Back Foot on Mixed Fed Messages

Pound News: Optimistic GDP Estimate Failed to Boost Sterling

The mood towards the Pound (GBP) remained generally bearish on Wednesday, even though the latest raft of UK data was rather mixed in nature.

Even though the NIESR gross domestic product estimate for the fourth quarter of 2017 bettered expectations, suggesting an uptick in growth, this was overshadowed by an unexpectedly sharp widening of the UK trade deficit.

Further volatility is likely for the Pound today with the release of the Bank of England’s (BoE) Credit Conditions and Bank Liabilities surveys, with investors keen for fresh insight into the central bank’s outlook.

 

Euro News: Investors Shrug Off Latest Greek Protests

With Eurozone data thin on the ground yesterday Euro (EUR) exchange rates struggled to find any particular traction, given the likely dovish outlook of the European Central Bank (ECB).

While thousands of Greeks took to the streets in protest over the latest round of creditor-mandated reforms this failed to particularly shake investors, with worries over domestic politics rather muted for the time being.

As the German gross domestic product is expected to print positively for 2017 this could see the Pound to Euro (GBP/EUR) exchange rate trending sharply lower this morning.

 

US Dollar News: US Price Pressures Show Signs of Faltering

As opinion amongst Federal Reserve policymakers proved a little more mixed on Wednesday the appeal of the US Dollar (USD) diminished once again.

The odds of any imminent interest rate hike were further dented by disappointing import and export price index figures, which indicated that domestic inflationary pressure remains limited.

Ahead of tonight’s monthly budget statement USD exchange rates are expected to remain on a generally weaker footing, barring any significant deterioration in market risk appetite.

 

Canadian Dollar News: CAD Dented By Weak Housing Market

In another blow for the Canadian housing market the latest building permits figure plunged by -7.7% on the month, exacerbating concerns over the health of the sector.

This naturally supported the Pound to Canadian Dollar (GBP/CAD) exchange rate, even as Brent crude pushed closer still to the US$70 per barrel market.

If the new housing price index rounds off a poor week of housing data the Canadian Dollar could lose further ground against its rivals.

 

Australian Dollar News: Rising Chinese Inflation Shores up AUD Exchange Rates

While the Chinese consumer price index failed to rise quite as far as forecast this still encouraged the Australian Dollar (AUD) to trend higher against many of the majors.

Rising Chinese inflation bodes well for the commodity-correlated Australian Dollar, raising hopes that demand for base metals from the world’s second largest economy will continue to pick up in the coming months.

Even so, AUD exchange rates remain vulnerable to any faltering in market risk appetite in the absence of any significant domestic data.

 

New Zealand Dollar News: Risk-On Mood Continues to Benefit NZD

The price correction continued for the Pound to New Zealand Dollar (GBP/NZD) exchange rate, with the pair trending bullishly on the back of improved market risk sentiment.

New Zealand Dollar exchange rates capitalised on the positive nature of the latest Chinese inflation data, as well as the relative weakening of the US Dollar and Fed interest rate hike bets.

However, tonight’s building permits data could dent the appeal of the New Zealand Dollar if the domestic housing sector fails to demonstrate signs of strength.

 

Upcoming Data

Thursday, 11 January 2018

09:00     German Gross Domestic Product

09:30     Bank of England Credit Conditions and Bank Liabilities Surveys

12:30     European Central Bank Meeting Minutes

13:30     Canadian New Housing Price Index

19:00     US Monthly Budget Statement

21:45     New Zealand Building Permits

 

James Spurway 

Currency Dealer

01442 892 070

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