Pound (GBP) Strengthened in Spite of Brexit, BoE Concerns
The Pound (GBP) traded higher yesterday, rising in spite of both Brexit and speculation regarding an impending rate cut from the Bank of England (BoE).
On the Brexit front, GBP investors were slightly unnerved by rumblings in Brussels about ensuring the UK maintains a ‘level-playing field’ with the EU.
As for the BoE, the market odds for a January rate cut continued to rise on Thursday, with the CME BoE Watch tool putting the odds at over 60%.
Centre stage for GBP investors today will be the UK’s latest retail sales figures. Will a rebound in sales growth in December help to boost the Pound?
Euro (EUR) Subdued Following ECB Minutes
The Euro (EUR) held steady on Thursday in response to the minutes from the European Central Bank’s (ECB) December policy meeting.
EUR investors seized on the bank’s upbeat comments regarding inflation, but any upside in the Euro was limited in light of policymakers’ more cautious outlook for the rest of the economy.
This will be put to the test later this morning with the final release of the Eurozone’s consumer price index (CPI), which is expected to confirm inflation accelerated to 1.3% in December.
US Dollar (USD) Firms on Upbeat US Data
The US Dollar (USD) was mostly flat yesterday as markets digested some mostly upbeat US economic data.
US retail sales and the Philadelphia manufacturing index both printed positively on Thursday, but it brought only limited support to the ‘Greenback’ as analysts continued to express their doubts about the recently signed ‘phase one’ trade deal between the US and China.
Coming up today, the publication of the latest US industrial production figures could weigh on the US Dollar this afternoon as economists forecast it will show a decline in factory output in December.
Canadian Dollar (CAD) Flat as Oil Hovers Around $58
The Canadian Dollar (CAD) was stuck in a narrow range on Thursday, with demand for the commodity-linked currency limited as WTI crude languished at $58 a barrel.
Australian Dollar (AUD) Dented by US-China Trade Doubts
The Australian Dollar (AUD) fell sharply on Thursday as markets took more time to digest the ‘phase one’ trade deal between the US and China.
Analysts overall were lukewarm towards the deal, with many suggesting that it may do little to prevent tensions flaring again in ‘phase two’ as negotiations turn to more sensitive subjects.
New Zealand Dollar (NZD) Slips as Risk Appetite Weakens
The New Zealand Dollar (NZD) also retreated yesterday, with the risk-sensitive ‘Kiwi’ taking a knock as investors expressed their doubts regarding the US-China trade deal.