Pound (GBP) Nosedives on Renewed Brexit Jitters
The Pound (GBP) got off to a poor start this week, plummeting over 1% against most of its peers in response to Boris Johnson’s combative speech outlining his vision for a post-Brexit trade deal with the EU.
Johnson said he will push for a Free-Trade Agreement (FTA) which won’t require the UK to accept alignment with EU rules, warning he would be prepared to walk away from talks if he is unable to secure such a deal.
This was in direct contrast with chief EU negotiator Michel Barnier, who said ahead of Johnson’s speech that any FTA would require guarantees that the UK would maintain a ‘level playing field’ with the EU.
Coming up today, will an improvement in the UK’s latest construction PMI offer some support to Sterling later this morning?
Euro (EUR) Undermined by Brexit Worries
The Euro (EUR) also fell victim to some Brexit uncertainty on Monday, with concerns of a damaging no-deal Brexit weighing on the Eurozone economy undermining sentiment.
This was more than enough to offset the Eurozone’s latest manufacturing PMI, which was revised slightly higher in January.
In the absence of any notable data, the Euro may find itself a little directionless today, with EUR looking to Wednesday’s retail sales figures for fresh impetus.
US Dollar (USD) Surges on Upbeat US Manufacturing PMI
The US Dollar (USD) jumped yesterday, flying higher on the back of the latest ISM manufacturing PMI as it revealed the US factory sector unexpectedly returned to growth last month.
Also buoying the ‘Greenback’ were ongoing concerns over coronavirus, which continued to rattle markets and drive demand for safe-haven currencies.
Looking ahead, the US Dollar may extend its gains later this afternoon if US factory orders are shown to have rebounded in line with expectations in December.
Canadian Dollar (CAD) Undermined by Oil Rout
The Canadian Dollar (CAD) fell back on Monday, with a sharp slump in oil prices putting significant pressure on the commodity-linked ‘Loonie’.
Australian Dollar (AUD) Rallies on Optimistic RBA Outlook
The Australian Dollar (AUD) spiked overnight on Monday, as the Reserve Bank of Australia (RBA) opted to leave interest rates on hold following its most recent policy meeting.
The ‘Aussie’ was also buoyed by the RBA’s ‘exceedingly optimistic’ outlook for the economy, with the central bank maintaining its growth forecasts in spite of the potential impact of the bushfires and coronavirus.
New Zealand Dollar (NZD) Firms Following RBA Rate Decision
The New Zealand Dollar (NZD) also ticked higher overnight on Monday, with NZD investors hoping the RBA’s optimism will be shared by the Reserve Bank of New Zealand (RBNZ) when it meets next month.
In the spotlight today we have the publication of New Zealand’s latest employment report. Will an acceleration in employment growth in the last quarter of 2019 send the ‘Kiwi’ higher later this evening?