- Pound undermined by BoE speculation – No-deal Brexit fears also exert pressure.
- US Dollar strengthens in spite of mixed data – Analysts warn a sharp jump in durable orders masks underlying weakness in US manufacturing.
- Australian Dollar buoyed by CPI figures – Quarterly inflation outpaces expectations.
- All eyes on the Fed – How might recent data have impacted the bank’s economic outlook?
Pound (GBP) Slumps as BoE in focus
The Pound (GBP) came under pressure yesterday amid growing uncertainty regarding the Bank of England’s (BoE) upcoming rate decision.
With the odds of the BoE opting for a rate cut this week almost 50-50 it prompted jittery investors to shy away from Sterling.
Adding additional pressure to GBP exchanges rates on Tuesday were also renewed no-deal Brexit fears at it was reported the next stage of negotiations will begin in March, leaving Boris Johnson with just 10 months to finalise a new trade deal.
Both the BoE and Brexit are likely to remain in focus for GBP investors through today’s trading session, potentially resulting in the Pound continuing to struggle.
Euro (EUR) Subdued in Absence of Data
The Euro (EUR) was left mostly directionless on Tuesday, with a lull in notable data leaving the single currency without any major catalyst for movement.
Also keeping a cap on the Euro was the continued strength of its most traded partner, the US Dollar (USD).
Meanwhile, the Euro may find some modest support through today’s session, following the release of a stronger-than-expected consumer confidence reading from Germany earlier this morning.
US Dollar (USD) Rallies in spite of Mixed Durable Goods Data
The US Dollar (USD) maintained its upward momentum through yesterday’s session, as safe-haven demand helped to make up from some mixed US data.
While the headline reading for US durable goods orders saw a sharp improvement in December, rebounding by 2.4%, a downwards revision to November’s figures as well as concerns over underlying weakness limited the upside in USD exchange rates.
Looking ahead, the US Dollar will be centre stage today as the Federal Reserve concludes its latest policy meeting.
No policy changes are expected from the Fed this month, but the bank’s forward guidance is likely to be closely watched by USD investors.
Canadian Dollar (CAD) Steadies as Oil Prices Creep Higher
The Canadian Dollar (CAD) held its ground on Tuesday as WTI crude prices climbed back above $53 a barrel in response to ongoing supply disruptions in Libya.
Australian Dollar (AUD) Bounces on Upbeat Inflation
The Australian Dollar (AUD) rallied from a three-week low overnight on Tuesday as AUD investors cheered Australia’s latest inflation figures.
The Australian Bureau of Statistics (ABS) reported inflation accelerated from 0.5% to 0.7% in the fourth quarter, outpacing market expectations as boosting hopes that a rate cut from the Reserve Bank of Australia (RBA) next month will be its last for a while.
New Zealand Dollar (NZD) Weakens on Coronavirus Fears
The New Zealand Dollar (NZD) slipped to a fresh six-week low on Tuesday, with the risk-sensitive ‘Kiwi’ being shunned by investors as markets remained in a state of panic over the coronavirus outbreak in China.
Data Releases
07:00 EUR German Consumer Confidence (Feb)
19:00 USD Fed Rate Decision
21:45 NZD Trade Balance (Dec)