GBP: Pound Sterling Climbs in Anticipation of Today’s BoE Speeches
The Pound has rallied this morning, shrugging off yesterday’s Brexit news regarding the future status of EU citizens and rising in anticipation of today’s imminent Bank of England (BoE) policymaker speeches.
Ben Broadbent and Andy Haldane will be giving statements today in Scotland and London, and though neither event is guaranteed to involve discussions on future monetary policy, the possibility that they will remark on the subject cannot be ruled out. Indeed, Haldane has expressed more hawkish sentiments in recent weeks, so traders will be watching the speeches very carefully for any clues.
A hawkish soundbite from either of the pair could catapult Sterling.
EUR: Pound Strengthens against Euro, Despite Positive Italian Industrial Figures
Yesterday’s German data release propelled the Euro as it demonstrated a soaring trade surplus for the European Union’s powerhouse economy. Today’s Italian industrial production figures continued the trend of positive EU data releases, demonstrating a substantial rise month-on-month of 0.7% and 2.8% year-on-year (the forecast was for a 0.4% rise).
Additionally, manufacturing sector output was up 0.9% from April, and 3.1% from May 2016.
This was, however, not enough to displace the rallying Sterling this morning, as traders bought into the Pound in anticipation of today’s BoE speeches.
USD: Hawkish Fed Statement makes US Dollar Soar
Fed official John Williams yesterday stated his support for one more US interest rate hike within the year, and with Williams originally being regarded as neutral on the subject, hopes for a rate hike by December (or indeed earlier) were fuelled.
Williams did, however, stress the underlying importance of inflation – as if it fails to rise within the coming months then the future speed of interest rate hikes will likely slow.
Masafumi Yamamoto of Mizuho Securities commented on Williams’ statement:
‘This is supporting the [US] Dollar as a positive factor, and limiting its downside at the moment. I think [Fed Chair] Yellen will confirm that rate hikes are coming, and that balance sheet shrinkage will come’.
Later today Fed officials Lael Brainard and Neel Kashkari will issue remarks, two officials that have historically been dovish. Should they continue to express the same sentiment, then the ‘Greenback’ could dip.
CAD: Canadian Dollar Weakened by Dwindling Oil Prices
The Canadian Dollar continues to be influenced by volatility within the crude oil market this morning, especially in the presence of the continued expansion of US drilling and production.
Tomorrow is the Bank of Canada’s rate hike decision day and overnight index swaps are currently assigning an 86% chance of an increase at the meeting.
Regardless, a few doves are unmoved in their sentiment; forecasters surveyed by Bloomberg (including the Toronto-Dominion Bank and the Imperial Bank of Commerce) maintain the view that the lending rate will remain steady.
AUD: NAB Business Confidence Increases, Australian Dollar Remains Bearish
The Pound remained somewhat bearish against the Australian Dollar yesterday as markets finished digesting the spate of last week’s negative UK data releases.
Today the ‘Aussie’ Dollar itself has continued to trade within a relatively narrow band against most of the majors as market disappointment from the dovish Reserve Bank of Australia (RBA) meeting and negative Australian ecostats diminished demand.
There was good news this week though in the form of the NAB Business Confidence survey, however, which demonstrated a 1 point increase in confidence from 8 to 9.
NZD: New Zealand Dollar Plummets as the South Island Experiences an Earthquake
Demand for the ‘Kiwi’ has softened slightly as improved US rate hike expectations and commodity volatility weigh on global risk appetite.
Today the softening transitioned into significant NZD declines, however, as New Zealand’s south island experienced an earthquake.
Investors, worried about a repeat of what occurred at Christchurch, have sold the ‘Kiwi’ Dollar in response – driving the Pound Sterling to New Zealand Dollar exchange rate higher.
Comments are closed.