The outbreak of the coronavirus pandemic resulted in severe disruption to the global shipping industry in early 2020, with traditional supply chains being severed as countries began to close their borders. The consequences of which have seen the cost of shipping increase by well over 400% during the pandemic.
- Improved UK services PMI fuels pound gains
- Euro stumbles ahead of Eurozone inflation data
- Canadian dollar fails to maintain oil-driven uptrend
Pound remains sensitive to Brexit developments
Support for the pound picked up at the start of the week after a surprise positive revision to the UK services PMI.
As the finalised PMI indicated that the sector had only stagnated in December, as opposed to contracting as initially thought, this encouraged investors to pile back into the pound.
While the UK economy still looks set for an underwhelming fourth quarter gross domestic product, GBP exchange rates pushed higher across the board.
However, as MPs return to parliament a resurgence in Brexit-based jitters could see the pound fall out of favour once again.
Rising Eurozone inflation could boost EUR
While the finalised raft of Eurozone services PMIs saw some minor upward revisions this was not enough to shore up the euro yesterday.
EUR exchange rates could gain this morning, however, as forecasts point towards a stronger Eurozone consumer price index.
If the headline inflation rate accelerates from 1.0% to 1.3% as anticipated this could reduce the odds of the European Central Bank (ECB) engaging in further monetary loosening and send the euro higher.
Widening trade deficit forecast to weigh on Canadian dollar
The Canadian dollar failed to hold onto its stronger footing yesterday, even as oil prices broke above the US$70 per barrel mark.
While geopolitical tensions in the Middle East bolstered oil prices, CAD exchange rates came under pressure thanks to a disappointing producer price index.
Further weakness could be in store for the Canadian dollar today if November’s balance of trade report disappoints.
Tuesday, 7th January 2020
10:00 EUR Consumer Price Index
13:30 CAD Balance of Trade
13:30 USD Balance of Trade
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)