As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Political turmoil keeps pound under pressure
- US dollar weakens as manufacturing data deteriorates
- Oil price slump drags down Canadian dollar
Pound set for further weakness on retail sales contraction
The pound is unlikely to find any support this morning as forecasts point towards retail sales excluding auto fuel contracting on the month in April.
Evidence that consumers are reining in their spending, driven by political anxiety and slowing wage growth, would give investors little cause for confidence in the economic outlook.
Even if retail sales show resilience on the month, though, GBP exchange rates look set to remain under pressure thanks to the latest bout of political turmoil.
If Theresa May announces a resignation date this could drive the pound sharply lower across the board, with markets wary of the prospect of a Brexiteer Prime Minister.
US dollar vulnerable to increasing signs of economic slowdown
As US factory growth slowed to its lowest level since 2009 the mood towards the US dollar soured yesterday, driven by worries over the underlying health of the world’s largest economy.
With US-China trade relations continuing to deteriorate the US manufacturing sector looks set to come under further pressure in the months ahead, raising the risk of a sustained slowdown.
USD exchange rates could extend their downtrend this afternoon on the back of April’s durable goods orders data.
As forecasts suggest a -2% contraction in orders on the month this could easily add to worries over the economic outlook, putting fresh pressure on the US dollar.
Canadian dollar slides as oil prices plunge
Oil prices plunged yesterday as global trade tensions continued to escalate, pushing Brent crude towards its biggest daily fall in six months.
This weighed heavily on the commodity-correlated Canadian dollar, eclipsing the impact of a sharp increase in wholesale trade sales.
With US oil inventories continuing to build CAD exchange rates look set to remain under pressure, driven by the bearish oil market.
Any further escalation of the US-China trade dispute could lead the Canadian dollar to shed further ground heading into the weekend.
Friday, 24th May 2019
09:30 GBP Retail Sales ex Auto Fuel
13:30 USD Durable Goods Orders
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)