As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Pound struggles to find momentum
- Fall in German factory orders weighs on euro
- US dollar holds onto positive footing as jobs data impresses
Pound struggling ahead of BoE Governor commentary
The pound struggled to find momentum mid-week in light of renewed Brexit uncertainty.
The main drag on Sterling sentiment yesterday appeared to be a warning by European Commission President Ursula von der Leyen, who questioned Boris Johnson’s timeframe for securing a trade deal with the EU.
Ahead of a meeting with the PM, von der Leyen suggested it would be ‘impossible’ for the UK to reach a comprehensive deal with the EU by the end of 2020, Johnson’s self-imposed deadline for agreeing a trade deal.
The focus for markets today will be a speech by Mark Carney later this afternoon.
GBP investors will be hoping that the BoE Governor may drop some more hints about the bank’s policy plans, particularly now that the UK looks set to ratify a withdrawal deal with the EU, with any hints towards a rate cut likely to dent the pound.
Euro slips thanks to sharp German factory orders decline
Support for the euro diminished as German factory orders saw a surprise -1.7% decline on the month in November.
This latest sign of weakness within the German manufacturing sector encouraged bets that a poor fourth quarter gross domestic product figure is on the cards, denting investor confidence.
With the Eurozone’s powerhouse economy still at risk of a renewed downturn, worries over the health of the wider currency union naturally picked up.
While no change is expected from the latest Eurozone unemployment rate the report is unlikely to offer the euro any particular support this morning.
Signs of tightening labour market boost US dollar demand
USD exchange rates gained fresh ground as the ADP employment change figure surpassed expectations in December, delivering growth of 202,000.
Markets were encouraged by this signal of continued tightening within the labour market and USD advanced.
Such a solid increase fuelled bets that Friday’s non-farm payrolls report could show a similar improvement, giving the Federal Reserve greater incentive to leave interest rates on hold for longer.
If the latest set of initial and continuing jobless claims figures also point towards a stronger labour market this may keep the US dollar on a bullish trend.
Thursday, 9th January 2020
10:00 EUR Eurozone Unemployment Rate
13:30 USD Jobless Claims
15:30 GBP Bank of England Governor Mark Carney Speech
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)