Indian Rupee (INR) Supported by Fed Rate Bets
Although the number of UK Mortgage Approvals was shown to have fallen in September, the Pound Sterling to Indian Rupee (GBP/INR) exchange rate still spent the European session trading almost 0.4% higher.
The Rupee was also trending in a weaker position against the US Dollar ahead of the Federal Open Market Committee policy announcement.
According to currency strategist Hemal Doshi; ‘FOMC will be dovish, which is already priced into the market, so I expect emerging market currencies to weaken after the statement.’
The FOMC is expected to leave interest rates on hold but bring its quantitative easing programme (in place since 2008) to an end.
Given the patchy nature of recent US reports, some economists are expecting the Fed to deliver a particularly dovish policy statement.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 98.8040
Pound Sterling (GBP) Exchange Rate Trends Lower after Cunliffe Comments
As the week continued the Pound Sterling (GBP) exchange rate eased lower against several of its most-traded currency counterparts.
The Pound began Wednesday on the back-foot as investors responded to the latest remarks from a Bank of England (BoE) official by ditching the British currency.
Jon Cunliffe, Deputy Governor of the BoE, cited the gloomier domestic/global growth outlook and softer inflation figures as reasons why the benchmark interest rate should stay at record lows.
The official also referred to the level of slack in the UK labour market, noting; ‘There are grounds to continue to suspect that labour supply may be behaving differently to the past, to be cautious about moving to tighten monetary policy on the basis of falling unemployment along and to wait for clearer signs of strength in pay growth.’
While these comments pushed Sterling lower against several of its peers, declines in the currency were compounded by disappointing UK mortgage approvals figures.
The number of approvals issued in September was a 14-month low and further evidence of a cooling in the UK’s housing market.
With UK data in short supply until Friday, further movement in the Pound Sterling exchange rate may be limited.
The GBP/EUR exchange rate is currently trending in the region of 1.2650
US Dollar (USD) Exchange Rate Trends Lower as Durable Goods Drop
As trading began on Wednesday the US Dollar (USD) exchange rate extended its recent run of declines.
This week the safe-haven asset has been feeling the pressure as a result of below-forecast Services PMI and Durable Goods Orders data.
The decline in durable goods came as a surprise to investors and added to fears that global economic output is slowing.
Economist Beth Ann Bovino commented; ‘We’re all wondering if businesses are spooked by what’s happening in the Eurozone.’
The expectation that the Federal Reserve might be particularly dovish in today’s policy statement is also keeping the US Dollar under pressure.
In the view of currency strategist Roberto Mialich; ‘The Fed will want to be flexible because low inflation allows central banks not to be in a rush to raise interest rates. That’s not something that will hurt the Dollar. But if the Fed lets the market think more quantitative easing is possible, that will be Dollar negative.’
The FOMC decision is due out at 19:00 GMT and notable currency market movement could occur if the Fed delivers any surprises.
The US Dollar to Pound Sterling (USD/GBP) exchange rate is currently trending in the region of 0.6202
Euro (EUR) Exchange Rate Fluctuates before German Stats
The Euro (EUR) exchange rate was trending higher against the Pound (GBP) and US Dollar (USD) on Wednesday.
The EUR/GBP pairing was able to advance following the release of disappointing UK mortgage approvals data while the EUR/USD exchange rate was bolstered by bets the Federal Reserve will be dovish in today’s policy statement.
Reports for the Eurozone have been in short supply this week, but there is plenty of data to watch out for tomorrow.
The figures with the most potential to inspire Euro movement include Germany’s unemployment rate and Consumer Price Index.
If the pace of consumer price growth in the Eurozone’s largest economy is shown to have increased it would bolster the Euro.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.2759
