As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Hopes of further government support benefit pound
- Canadian dollar oscillates as oil price volatility continues
- US dollar bullishness eases as central banks boost liquidity
BoE emergency action shores up pound demand
Following the Bank of England’s (BoE) surprise decision to cut interest rates to a fresh low of 0.1% the mood towards the pound widely improved.
With fresh quantitative easing in the pipeline and further government support on the way worries over the outlook of the UK economy temporarily eased.
Even so, as investors brace for the release of March’s UK manufacturing and services PMIs tomorrow GBP exchange rates may struggle to hold onto a positive footing.
Lingering fears of a potential slip into recession and the risk of increased government debt could still put a dampener on the pound in the near future.
Oil market volatility continues to drive Canadian dollar movement
As the oil market continued to experience volatility, driven by the latest escalation in the price war between Russia and Saudi Arabia, the Canadian dollar struggled to push higher.
While government support for the Covid-19 stricken global economy continued to step up this was not enough to shield the commodity-correlated currency from the latest oil price decline.
Even so, CAD exchange rates could find a temporary rallying point this afternoon if January’s wholesale trade sales figure proves encouraging.
Evidence of greater resilience within the Canadian economy since the start of the year may help to limit the potential for any further Canadian dollar losses.
Manufacturing sector weakness may limit US dollar strength
The gains of USD exchange rates showed signs of easing ahead of the weekend as the Federal Reserve took action to boost US dollar liquidity.
A lull in market risk anxiety saw demand for the US dollar begin to ease, even as doubts over the health of the global economy lingered.
With February’s Chicago Fed national activity index looking set to fall deeper into negative territory this could limit the potential for US dollar gains today.
However, even if the manufacturing sector continues to demonstrate signs of weakness any fresh wave of market bearishness could still see USD exchange rates pushing higher once again.
Monday, 23rd March 2020
12:30 CAD Wholesale Trade Sales
12:30 USD Chicago Fed National Activity Index
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)