Pound (GBP) Fluctuates with Markets Divided on BoE Rate Cut
The Pound (GBP) traded in a wide range on Monday as a result of ongoing speculation over whether the Bank of England (BoE) will announce an interest rate cut on Thursday.
The odds of a January rate cut climbed above 70% earlier this month, but have since eased slightly on the back of some better-than-expected UK economic data.
Coming up today, the Confederation of British Industry (CBI) will publish its latest distributive trades index, which economists forecast will show a slight improvement in retail activity this month.
But with both the BoE and Brexit in focus this week, the data’s impact on the Pound may prove negligible.
Euro (EUR) Dented by Deteriorating German Business Morale
The Euro (EUR) opened this week’s session on the back foot, coming under pressure in response to an unexpected weakening of German business confidence at the start of 2020.
The Ifo business sentiment index fell from 96.3 to 95.9 this month, with Germany’s disappointing growth in 2019 leading to a more cautious mood amongst businesses.
In the absence of any notable data the Euro may struggle to find support today, particularly if the US Dollar (USD) remains in demand.
US Dollar (USD) Strengthens as Markets Unsettled by Coronavirus Developments
The US Dollar (USD) trended higher through yesterday’s session as investors flocked to the safe-haven currency as markets were spooked by the coronavirus in China.
As the death toll continues to rise, the Chinese government has imposed travel bans on several cities and extended its Lunar New-Year holidays, sparking fears of potential disruption to the world’s second largest economy, and bolstering demand for the ‘Greenback’.
On the docket for USD investors today is the release of the latest US durable goods order figures. Will a rebound in order growth in December strengthen the US Dollar later this afternoon?
Canadian Dollar (CAD) Weakens as Oil Prices Slump
The Canadian Dollar (CAD) got off to a poor start this week, with the commodity-linked currency coming under pressure as concerns over the coronavirus in China drove a sharp slump in oil prices.
Australian Dollar (AUD) Slips in Risk-Off Trade
The Australian Dollar (AUD) trended lower on Monday, with the risk-sensitive currency facing pressure due to the focus on the coronavirus outbreak.
Looking ahead, the publication of Australia’s quarterly consumer price index could offer some support to the ‘Aussie’ overnight as economists forecast domestic inflation will have ticked up from 0.5% to 0.6% in the last quarter of 2019.
New Zealand Dollar (NZD) Tumbles on Coronavirus Jitters
The New Zealand Dollar (NZD) also retreated during yesterday’s session as market risk aversion saw traders shun the ‘Kiwi.’