Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements.
From Torfx.
Headlines
- BoE cuts growth forecasts – 9-0 vote against hike Sterling.
- Economists point to early 2017 rate rise – Markets price in mid 2018 hike.
- GBP/EUR falls -130 pips – ‘Cable’ close to monthly high.
- Pound down vs. commodity bloc – GBP/NZD hits monthly low.
Sterling
The Pound weakened slightly versus most of the majors yesterday as the Bank of England cut its growth forecasts and the one hawkish member of the monetary policy committee retracted their vote for higher rates.
The BoE elected to leave rates on hold and refrain from additional asset purchases, as expected, but traders were disappointed with the generally dovish message in Governor Mark Carney’s speech. Ian McCafferty’s decision to vote against rising rates after months of voting in favour also weighed on the Pound.
Carney asserted that the next move in interest rates would be up: ‘absolutely, the whole MPC stands by that’, and suggested that rates would be hiked before the current market forecasts of mid 2018. However, GDP forecasts for 2016 and 2017 were cut from 2.5% and 2.6% to 2.2% and 2.3% respectively. Additionally, inflation was projected to remain below 1.0% through 2016 and wage growth was predicted to run at around 3.0% this year.
Economists now expect BoE rates to remain at the current record low until the beginning of 2017.
Euro
The Pound to Euro exchange rate softened by around -130 pips yesterday as BoE Governor Mark Carney did little to assuage market fears that British interest rates could be left on hold for at least another two years.
UK rates have remained at the rock-bottom level of 0.50% for almost seven years now and with central banks across the globe – bar the Federal Reserve – speaking openly about loosening rather than tightening policy investors are not confident in the BoE’s ability to begin hiking rates before 2018.
Indeed, Governor Carney, who was compared to an ‘unreliable boyfriend’ back in 2014 for giving off mixed messages with regards to possible rate rise timings, was labelled a ‘defensive husband’ yesterday after denying he had misled the public with hawkish talk midway through 2015 while still promising to begin the hiking cycle at the appropriate time.
US Dollar
Euro
The Pound to Euro exchange rate softened by around -130 pips yesterday as BoE Governor Mark Carney did little to assuage market fears that British interest rates could be left on hold for at least another two years.
UK rates have remained at the rock-bottom level of 0.50% for almost seven years now and with central banks across the globe – bar the Federal Reserve – speaking openly about loosening rather than tightening policy investors are not confident in the BoE’s ability to begin hiking rates before 2018.
Indeed, Governor Carney, who was compared to an ‘unreliable boyfriend’ back in 2014 for giving off mixed messages with regards to possible rate rise timings, was labelled a ‘defensive husband’ yesterday after denying he had misled the public with hawkish talk midway through 2015 while still promising to begin the hiking cycle at the appropriate time.
US Dollar
Prior to the Bank of England’s dovish policy announcements the Pound to US Dollar exchange rate rallied to a near one-month high.
The ‘Greenback’ shed value as investors pushed back their expectations for the next Federal Reserve rate hike into 2017. New York Fed President William Dudley mentioned that the US Dollar’s recent strength could prove a problem for the domestic economy if additional tightening measures pushed the currency higher and therefore made exports less appealing to international buyers.
‘Cable’ gave up its gains following the BoE statement, however, a disastrous -2.9% decline in US factory orders and a -5.0% contraction in durable goods orders meant that the Dollar was unable to push ahead against Sterling.
It will be interesting to see how markets react to this afternoon’s US non-farm payroll print. Anything lower than 150,000 could drive GBP/USD higher, while anything above 250,000 could push the Pound lower.
Canadian Dollar
The ‘Greenback’ shed value as investors pushed back their expectations for the next Federal Reserve rate hike into 2017. New York Fed President William Dudley mentioned that the US Dollar’s recent strength could prove a problem for the domestic economy if additional tightening measures pushed the currency higher and therefore made exports less appealing to international buyers.
‘Cable’ gave up its gains following the BoE statement, however, a disastrous -2.9% decline in US factory orders and a -5.0% contraction in durable goods orders meant that the Dollar was unable to push ahead against Sterling.
It will be interesting to see how markets react to this afternoon’s US non-farm payroll print. Anything lower than 150,000 could drive GBP/USD higher, while anything above 250,000 could push the Pound lower.
Canadian Dollar
Sterling weakened by over half a cent against the Canadian Dollar yesterday as hopes of a deal between OPEC members and Russia to curb production continued to drive crude prices higher.
The commodity-sensitive ‘Loonie’ was also boosted by the dip in value of the ‘Greenback’, which made oil cheaper – not less valuable – to foreign buyers and subsequently led to a temporary increase in demand.
Australian Dollar
Australian Dollar
GBP/AUD tumbled by around -70 pips yesterday as dovish BoE rate hike bets damaged the appeal of the Pound. Demand for the commodity-sensitive ‘Aussie’ was also bolstered by weakness in the US Dollar, which allowed risk-correlated currencies to appreciate.
New Zealand Dollar
New Zealand Dollar
Sterling sunk to a monthly low against the New Zealand Dollar yesterday, depreciating by around -150 pips, as economic sentiment continued to favour the ‘Kiwi’ following Tuesday’s surprisingly strong labour market report, which saw unemployment plunge from 6.0% to 5.3%.
Data Released
10:00 EUR Euro-Zone Unemployment Rate (NOV) Medium 10.7%
10:00 EUR Euro-Zone Retail Sales (YoY) (NOV) Medium 2.0%
13:10 CAD Bank of Canada's Poloz speaks in Ottawa Medium
10:00 EUR Euro-Zone Retail Sales (YoY) (NOV) Medium 2.0%
13:10 CAD Bank of Canada's Poloz speaks in Ottawa Medium
We are poised to deliver quality services to our clients, ranging from Market Updates, Portfolio Management, Investment Consultancy, Marketing, Public Events, Forex Expos and Training of new Traders. Contact us today.
Happy Trading.
No comments:
Post a Comment