GBP jumps, USD supported by rate speculation
Philip McHugh August 23rd 2019 - 2 minute read
- Signs of Fed reticence boost US dollar
- Canadian dollar strengthens on wholesale trade sales surprise
- Comments from German Chancellor trigger pound surge
US dollar braces for Fed Chair comments
The US dollar was boosted as two members of the Federal Open Market Committee (FOMC) pushed back against the idea of another interest rate cut.
While markets still see high odds of the Fed cutting interest rates in September these signs of internal division were USD supportive.
Comments from Fed Chair Jerome Powell look set to provoke further volatility for the US dollar today, with investors looking for any hawkish signals.
USD’s uptrend could continue if Powell demonstrates less willingness to engage in fresh monetary loosening.
Canadian dollar weakness forecast on retail sales decline
Canadian wholesale trade sales delivered surprise growth in June, offering the Canadian dollar a leg up against some of its rivals.
However, CAD exchange rates could return to a downtrend this afternoon thanks to the latest retail sales figures.
With forecasts pointing towards a deepening monthly contraction of -0.3%, confidence in the Canadian economic outlook could deteriorate once again.
Brexit optimism encourages pound uptrend
Demand for the pound strengthened sharply in the wake of comments from German Chancellor Angela Merkel.
As Merkel noted that the issue of the Irish backstop could still be resolved before the Brexit deadline investors were given cause for confidence.
Even so, with EU leaders showing no desire to reopen negotiations over the withdrawal agreement, this bout of optimism could prove short-lived.
Without more concrete signs of a potential compromise the risk of a no-deal scenario could undermine GBP.
Friday, 23rd August 2019
13:30 CAD Retail Sales
15:00 USD Federal Reserve Chair Jerome Powell speaks at Jackson Hole Symposium