The US dollar remained well supported on Friday, with the currency continuing to catch bids in light of the Federal Reserve’s recent hawkish shift.
Meanwhile, Sterling is trading with modest gains so far this morning, with GBP/EUR ticking up to €1.1536 and GBP/USD buoyed at 1.3920. GBP/CAD has climbed to C$1.6954, while GBP/AUD and GBP/NZD have advanced to AU$1.7926 and NZ$1.9288, respectively.
Looking ahead, will another solid payroll reading allow the US dollar to close this week’s session on a high?
What’s been happening?The pound fell back yesterday following the Bank of England’s latest rate decision, in which it kept interest rates on hold.
While GBP investors welcomed the BoE’s upgraded growth forecasts, which predict the UK economy will experience its strongest annual expansion in the post-war era, they were less enthused by its suggestion that slowing down weekly bond purchases ‘should not be interpreted as a change in the stance of monetary policy’.
The US dollar also weakened on Thursday as a drop in US Treasury yields, coupled with dovish Federal Reserve expectations, undermined the appeal of the ‘Greenback’, although these losses were tempered later in the session by a larger-than-expected fall in US jobless claims last week.
The euro, meanwhile, enjoyed strong support through yesterday’s trading session, starting with a larger-than-expected rise in Germany’s latest factory order figures.
This was followed by the Eurozone’s latest retail sales release, which printed well above expectations in March and bolstered hopes that the bloc will go into the second quarter with strong momentum.
What’s coming up?Kicking off today’s session was the publication of Germany’s latest industrial production figures, which look to provide a boost to the euro this morning after reporting a rebound in factory output in March.
EUR investors will look to a speech by European Central Bank (ECB) President Christine Lagarde for fresh impetus later today, with the euro’s recent gains potentially being tempered if she strikes a cautious tone.
The focus for GBP investors today will be the results of the Scottish election, where another majority for the Scottish National Party will raise concerns over the possibility of another independence referendum.
Closing out this week’s session will be the latest US non-farm payroll figures.
Economists are forecasting the US economy will have added close to 1 million jobs last month, a result which could help to drive the US dollar higher later this afternoon.
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)