Weekly Roundup: Australian dollar undermined ...
The Australian dollar trended lower through the majority of last week, with the risk-sensitive currency struggling to attract support as a gloomy market mood prevailed through most of the session.
With another round of Brexit negotiations set to begin soon, the markets were once again uneasy yesterday. However political tensions in North Korea helped Sterling make some gains against the riskier currencies.
GBP/EUR begins today down -0.3% at €1.0776, while GBP/USD is recording gains of 0.2% to hit US$1.2957. GBP/NZD has also recorded similar gains, trading at NZ$1.7888, while GBP/AUD is stuck at AU$1.6314 and GBP/CAD is slipping away from opening levels of C$1.6164.
There is nothing on the UK economic calendar today, but what are markets expecting from the next stage of Brexit negotiations? Read on to find out why there is a little more confidence this time round…
What’s been happening?
Due to the fact it was a Bank Holiday yesterday in the UK, there was no economic data set for release. However, the pound managed to find some support from the fact that Foreign Secretary Boris Johnson recently conceded that the UK would indeed have to pay some form of ‘divorce’ bill to the European Union.
Johnson had previously rubbished the idea, in a series of comments seen to have significantly damaged the tone of the negotiations. The EU has insisted that the UK must meet its financial obligations before issues such as trade can be discussed, so the government’s refusal to acknowledge the need for such payments threatened to delay talks even further.
GBP/USD was able to benefit from the fact that chances of another interest rate hike from the Federal Reserve remain weak after last week’s disappointing Jackson Hole symposium speech from Federal Reserve Chair Janet Yellen. Markets are now expecting a 65.3% chance that the Federal Reserve will not change interest rates again this year.
What’s coming up?
There is no UK data left on the economic calendar today, although this morning’s Nationwide house prices figures could weigh on sterling as the day’s trading progresses. House prices declined -0.1% month on month.
The day’s Eurozone data has also been released, with a surprise rise in German consumer confidence and news that the Romanian government is set to join the Eurozone in 2022 helping to push EUR higher.
US consumer confidence data is set for release later, but this is unlikely to improve the US dollar, which could provide more support for GBP/USD. The damage wrought upon Texas by Storm Harvey is weighing on the markets.
Philip McHugh
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)
