The US dollar fell to two-week lows against its major rivals yesterday after concerns over the US economy’s resilience sapped USD demand.
Turning to the pound this morning, Sterling looks to close the week on a high, with GBP/EUR ticking up to €1.1172, GBP/USD jumping to $1.2407 and GBP/CAD soaring to C$1.6400. GBP/AUD and GBP/NZD have surged to AU$1.8036 and NZ$1.9355 respectively.
US economic data will be the main focus for today. Could a slowdown in US retail sales weaken the US dollar this afternoon?
What’s been happening?
The European Central Bank’s long awaited stimulus announcement was unsurprisingly the focal point for markets yesterday.
After cutting its deposit rate to -0.5% the ECB announced it would keep rates at record lows until inflation picked back up.
ECB President Mario Draghi also announced that the bank would reintroduce its quantitative easing programme, with bond purchases of €20bn starting from November.
A kneejerk response to the ECB stimulus package initially saw the euro plummet against it peers, but the currency closed higher on hopes it will spur growth in the Eurozone.
At the same time, the pound struggled to find momentum yesterday, with markets largely shrugging off headlines suggesting Boris Johnson had misled the Queen over his proroguing of parliament.
Finally, the US dollar was knocked on Thursday as a lacklustre inflation reading failed to inspire confidence in the US economy, resulting in a sharp fall in US bond yields.
What’s coming up?
The latest US retail sales figures will be in the spotlight today.
Their release may result in the US dollar coming under pressure as a suspected slowdown in sales growth is likely to put more pressure on the Federal Reserve to cut rates again when it meets again next week.
For EUR investors the focus this morning will likely be on the publication of the Eurozone’s earning figures. The report could cause some weakness in the euro if wage growth slowed in the second quarter as forecast.
Once again UK data is thin on the ground today, leaving UK political headlines as the only real catalyst of pound movement.
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)