Sterling
The Pound remained fairly stable on Friday following a tumultuous week that saw Sterling plunge to significant lows ahead of UK Prime Minister Theresa May’s Brexit strategy speech – and then recover swiftly following the PM’s announcement that parliament would get to vote on the new EU trade deal.
Speaking at the World Economic Forum in Davos on the day of Donald Trump’s Presidential inauguration, UK Chancellor Phillip Hammond sought to draw a line between Brexit and the US election result. Hammond said that the anti-globalisation rhetoric employed by Trump was not present in the Leave campaign and reminded that the decision to leave the EU would allow Britain to agree new trade deals with the rest of the world. The Chancellor went on to criticise former PM Tony Blair for failing to control immigration during his time in office, which Hammond said was a significant factor in shaping public opinion leading up to the referendum.
Euro
A disappointing British retail report helped push the Pound lower against the Euro on Friday. GBP/EUR tumbled by around a quarter of a cent following news that retail sales volumes dipped -1.9% in December, which represented the sharpest monthly fall for more than four-and-a-half years. Analysts suggested that rising prices could have contributed to the alarmingly low print and warned that we could see this trend continue in 2017 as consumers’ spending power decreases.
The only scheduled point of interest for traders of the single currency today is this morning’s speech from European Central Bank President Mario Draghi. The Euro could fluctuate if the ECB Chief gives out any new clues about policy direction, however, having recently left rates on hold the ECB is not expected to give away any radical information at this juncture.
US Dollar
Markets were fairly stable over the weekend that saw Donald Trump officially become the 45th President of the United States of America.
A vacuum of policy information saw the US Dollar soften by around half a cent versus the Pound, with hopes of huge fiscal stimulus dashed by a lack of new information. Instead of laying out plans to spend big to ‘make America great again’, Trump’s administration spent large parts of the weekend arguing with US media outlets over how many people turned up to celebrate the President’s inauguration. This deficit of policy clarity prompted a small bout of US Dollar selling but the potential remains for the ‘Greenback’ to rise if Trump decides to focus on spending at future addresses.
Canadian Dollar
The Pound to Canadian Dollar exchange rate appreciated by over half a cent over the weekend as softer-than-anticipated Canadian CPI data pressurised the ‘Loonie’. Canadian inflation printed at 1.5% in December, up from 1.2% in November but down on estimates of 1.7%. The underwhelming result was accompanied by a slowdown in Canadian retail sales from 1.1% to 0.1%, which added to the Canadian Dollar’s woes.
Australian Dollar
Sterling registered gains of around a cent over the weekend as a raft of new Chinese data failed to boost the appeal of the risk-sensitive ‘Aussie’.
Chinese GDP rose unexpectedly from 6.7% to 6.8% in the fourth quarter of 2016, however, industrial production slowed from 6.2% to 6.0%. The two data prints appeared to equal each other out in terms of demand for the ‘Aussie’. Strong Chinese growth is seen to bode well for Australia, usually because of the strong trade links between the two nations. However, industrial production is one of the most important indicators because the majority of Australia’s exports to China are raw mining materials used in production.
New Zealand Dollar
The Pound to New Zealand Dollar exchange rate also rallied by around a cent over the weekend as Brexit anxieties were replaced by concerns over Donald Trump’s Presidency. Trump has not yet given any clear indication of his policy plans but his protectionist rhetoric jarred with investors and caused a slight selloff in risk assets such as the ‘Kiwi’.
Data Released
11:30 EUR ECB’s Draghi Speaks in Torino, Italy Medium