As geopolitical tensions between the East and West rise, sanctions and souring relations could have lasting impacts on business globally.
- Rishi Sunak’s Budget in focus.
- Will the European Central Bank ease monetary policy this week?
- Fed rate cut speculation weighs on the US dollar.
UK’s Budget ahead
Sterling was modestly supported before the weekend by comments from the European Union’s chief Brexit negotiator. Michel Barnier said that despite the ‘very serious’ differences each side had about a future trade relationship, it was still possible to reach a trade deal this year.
The pound continued to benefit after investors priced in a lower chance of a surprise Bank of England (BoE) rate cut.
However, the UK’s Budget could leave Sterling on the back foot later this week if the Chancellor fails to announce the hoped-for increase in public spending.
ECB interest rate decision could reverse euro gains
Weakness in the US dollar helped the euro march higher on Friday.
The common currency was also supported by the news that German factory orders rebounded to a five-year high.
However, the euro could come under pressure ahead of the European Central Bank’s (ECB) monetary policy meeting and interest rate decision. While central banks around the world have slashed interest rates in an attempt to offset the potential impact of Covid-19, there is uncertainty over whether or not the ECB will ease policy with the little room they have available.
Fed rate cut expectations send the US dollar lower
The US dollar tumbled before the weekend despite the release of better-than-forecast US non-farm payrolls. Data revealed that the US added 273,000 jobs to the economy in February while the country’s employment rate remained at 3.5%, its lowest level in more than 50 years.
However, investors continue focusing on last week’s surprise interest rate cut from the Federal Reserve, with many pricing in a further rate cut later this month. On Friday, the US dollar index was on course for its largest weekly fall since May 2016, slumping more than 2% over the course of the week.
Looking ahead, the dollar could continue feeling the pressure ahead of the next Federal Open Market Committee (FOMC) gathering.
Wednesday 11th March
12:30 GBP Spring Budget 2020
Thursday 12th March
12:45 EUR ECB Interest Rate Decision
13:30 EUR ECB Press Conference
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)