Mid-Week Currency Report
Mar 18th 2015 | 4:13 am
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Mid-Week Currency Report
GBP
The pound had a torrid day falling against nearly all of its trading counterparts. It was the fourth day of losses against the euro. I believe the major contribution the pound falling away was a culmination of two factors. The first being a hangover from Bank of England Governor Carney quashing any chance of an early rate rise last Thursday. He stated the BoE believed inflation would stay at record lows for at least the next two years. The second reason is because there was no economic data to support the pound out at all.
This morning we have the minutes from the Bank of England’s meeting regarding interest rates earlier this month. We already know there was no change from the decision but the split how the votes happened can cause the pound to move. The expectancy is that all nine Monetary Policy Committee members will vote in favour of keeping rates on hold. Any surprise votes in favour of a hike could see the pound get a nice boost this morning. We will also have the annual Budget statement from Chancellor George Osborne, it is not expected to throw up any surprises but it is still better to be cautious if you have a trade to complete.
EUR
Only a week after the European Central Bank started their unprecedented Quantitative Easing programme, inflation figures (Core Consumer Price Index) surprised the market coming in at 0.7% when only expected at 0.6%. The Consumer Price Index came in as expected bringing no surprises to the market.
The next big positive from yesterday was the ZEW Survey that looks at economic sentiment across the whole of the Eurozone, it posted the best results since February 2014. The expected figure was 58.9 but the actual figure came out at 62.4. Germanys individual ZEW Survey looking at March’s economic sentiment also posted better than expected results at 55.1 when only expected to achieve 50.0. Overall yesterday was a very positive day for the euro from a data release perspective. There are no discernible data releases out for the single bloc today.
Towards the end of the week we may see more from the Greek debacle at the EU summit in Brussels. The Greek PM Tsipras has specially requested a meeting with various senior officials to discuss Greece’s funding issues over the two day meeting starting tomorrow. Greece still remains shut out of the debt market and their PM Tsipras will look to convince the EU that their reforms warrant financial aid.
USD
Since breaking through to fresh highs (against a variety of currencies including the EUR and GBP) at the end of last week the USD has lost ground against both the pound and euro in the past two days. The last two days have been relatively quiet from a data perspective, but any releases have been over looked as anticipation builds towards tonight’s Federal Reserve interest rate decision. Traders have been scrutinising the wording used at the past few meetings looking for any indication that a hike is imminent. The US is expected to raise rates before the end of 2015 but many are still arguing the economy could cope with a hike earlier from the Federal Reserve.
Following tonight’s meeting the next big releases will be tomorrow afternoon and will focus on employment data.
AUD
The Australian dollar has had a poor run of late as many traders have been pricing in the high possibility of an interest rate cut in Aprils meeting. However in the past 48 hours the AUD has risen against nearly all of its trading counterparts as recent data showed a cut may not need to be implemented quite so soon. The minutes from March’s central bank meeting showed the terminology ‘some time’ was used with reference to another interest rate cut. Their next meeting will be held April 7th and at this moment regardless of the result expect AUD volatility.
The pound had a torrid day falling against nearly all of its trading counterparts. It was the fourth day of losses against the euro. I believe the major contribution the pound falling away was a culmination of two factors. The first being a hangover from Bank of England Governor Carney quashing any chance of an early rate rise last Thursday. He stated the BoE believed inflation would stay at record lows for at least the next two years. The second reason is because there was no economic data to support the pound out at all.
This morning we have the minutes from the Bank of England’s meeting regarding interest rates earlier this month. We already know there was no change from the decision but the split how the votes happened can cause the pound to move. The expectancy is that all nine Monetary Policy Committee members will vote in favour of keeping rates on hold. Any surprise votes in favour of a hike could see the pound get a nice boost this morning. We will also have the annual Budget statement from Chancellor George Osborne, it is not expected to throw up any surprises but it is still better to be cautious if you have a trade to complete.
EUR
Only a week after the European Central Bank started their unprecedented Quantitative Easing programme, inflation figures (Core Consumer Price Index) surprised the market coming in at 0.7% when only expected at 0.6%. The Consumer Price Index came in as expected bringing no surprises to the market.
The next big positive from yesterday was the ZEW Survey that looks at economic sentiment across the whole of the Eurozone, it posted the best results since February 2014. The expected figure was 58.9 but the actual figure came out at 62.4. Germanys individual ZEW Survey looking at March’s economic sentiment also posted better than expected results at 55.1 when only expected to achieve 50.0. Overall yesterday was a very positive day for the euro from a data release perspective. There are no discernible data releases out for the single bloc today.
Towards the end of the week we may see more from the Greek debacle at the EU summit in Brussels. The Greek PM Tsipras has specially requested a meeting with various senior officials to discuss Greece’s funding issues over the two day meeting starting tomorrow. Greece still remains shut out of the debt market and their PM Tsipras will look to convince the EU that their reforms warrant financial aid.
USD
Since breaking through to fresh highs (against a variety of currencies including the EUR and GBP) at the end of last week the USD has lost ground against both the pound and euro in the past two days. The last two days have been relatively quiet from a data perspective, but any releases have been over looked as anticipation builds towards tonight’s Federal Reserve interest rate decision. Traders have been scrutinising the wording used at the past few meetings looking for any indication that a hike is imminent. The US is expected to raise rates before the end of 2015 but many are still arguing the economy could cope with a hike earlier from the Federal Reserve.
Following tonight’s meeting the next big releases will be tomorrow afternoon and will focus on employment data.
AUD
The Australian dollar has had a poor run of late as many traders have been pricing in the high possibility of an interest rate cut in Aprils meeting. However in the past 48 hours the AUD has risen against nearly all of its trading counterparts as recent data showed a cut may not need to be implemented quite so soon. The minutes from March’s central bank meeting showed the terminology ‘some time’ was used with reference to another interest rate cut. Their next meeting will be held April 7th and at this moment regardless of the result expect AUD volatility.
