Pound Sterling Exchange Rates Boosted as House Price Growth Raises Rate Hike Bets
The Pound was boosted yesterday by better-than-expected house price growth data from Halifax. Economists had expected to see property values increase 0.1% month-on-month during March, but the latest data showed a 1.5% increase in value.
The property market was considered to be one of those hardest hit by Brexit, so signs of resilience here have raised hopes that the wider UK economy is strong enough to handle another interest rate hike from the Bank of England (BoE) next month.
A speech from BoE Chief Economist Andy Haldane could cause some Pound Sterling volatility today, especially if the traditionally-dovish policymaker continues to sound cautious over the need for more interest rate hikes.
GBP/EUR Exchange Rate Stuck at Opening Levels as Weak US Dollar Supports Euro
The latest German trade figures showed a surprise decline in both imports and exports, with the latter falling over twice the pace of the former. This meant the trade surplus rose €1 billion to €18.4 billion, rather than to €20 billion as predicted.
Meanwhile, ECB Vice President Vitor Constancio claimed that the Governing Council should be careful not to tighten its loose monetary policy too quickly.
Despite all of this, the GBP/EUR exchange rate was only able to hold opening levels as the day’s trading came to an end.
Trump Trade Tariff Tweet Boosts GBP/USD Exchange Rate
Fears that the current disputes between the US and China over trade tariffs could still dissolve into a full-blown trade war weighed on the US Dollar yesterday, allowing the GBP/USD exchange rate to record gains in the region of 0.4%.
Market jitters were reawakened by another tweet from President Donald Trump, who called the current trade arrangements ‘stupid’.
US Federal Reserve official Robert Kaplan is scheduled to speak in Beijing today.
Canadian Business Positivity Raises Interest Rate Hike Hopes; GBP/CAD Exchange Rate Slips
Positive results from the latest Bank of Canada (BOC) survey of businesses strengthened the case for another interest rate hike in the near-term - perhaps even during next week’s meeting - pushing the GBP/CAD exchange rate below opening levels.
48% of businesses reported stronger sales over the past year, with 43% expecting stronger growth over the next 12 months.
Canadian housing starts and building permits figures are set for release this afternoon. Strong building activity might help to improve the outlook upon the economy.
Australian Dollar Weakened by Trade War Fears; GBP/AUD Exchange Rate Edges Higher
The Australian Dollar was pushed largely lower yesterday thanks to global trade war fears, but was able to hold its ground only against the US Dollar and the Chinese Yuan, which were unsurprisingly bearing the brunt of market concerns.
There was no domestic data released for Australia to provide support, allowing the GBP/AUD exchange rate to edge 0.2% higher.
The biggest development today for many of the major currencies is likely to be a speech from Chinese President Xi Jinping at the Boao Forum for Asia Annual Conference in Hainan Province.
Speaking on the 40th anniversary of Deng Xiaoping’s market reform policies, many hope that Xi will open Chinese markets further and announce policies that would abate the tensions between China and the US.
GBP/NZD Exchange Rate Weakens as New Zealand Dollar Shrugs off Trade Fears
Unlike its antipodean cousin, the New Zealand Dollar was able to shrug off market fears yesterday and race higher. The GBP/NZD exchange rate fell -0.2%.
New Zealand is less exposed to the Chinese economy, meaning that worries over trade need not deter NZD investors to the same extent as those with AUD positions.
Assuming President Xi says nothing of interest as far as markets are concerned today, the New Zealand truckometer tonight will give investors something to focus on. The measure of haulage activity is a good indicator of domestic business conditions.