Posts belonging to Category eurozone



Euro loses election gains, pound hits 6 month high vs. US dollar

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The ECB rate decision helped GBP/EUR achieve highs of €1.1885, dissatisfaction with Trump pushed GBP/USD all the way to $1.2914, and further Canadian dollar losses meant GBP/CAD was able to surge to a new best level of C$1.7633. Meanwhile, GBP/AUD climbed another cent to AU$1.7326 as GBP/NZD achieved NZ$1.8815 – its strongest rate since July last year.

A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Yesterday’s European Central Bank (ECB) meeting left the euro struggling, with President Mario Draghi seeming keen to quash speculation that there are any plans to adjust monetary policy at this juncture.

Although he acknowledged that the Eurozone’s economic outlook is a little brighter, he also asserted that ‘a very substantial degree of monetary accommodation’ is still necessary in order to give inflation a leg up.

With the euro falling in the wake of Draghi’s comments, the pound was able to creep its way up to its best levels since the results of the first round of the French general election were announced.

While Draghi was responsible for the euro’s losses, it was President Trump causing reduced demand for the US dollar. Concerns that his hotly-anticipated tax plan was actually a bit of a flop saw USD exchange rates slide. A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Persistent weakness in the commodity currencies also worked in the pound’s favour, allowing the British currency to advance to some of its best levels since the EU referendum.

News that the GfK survey of consumer confidence softened from -6 to -7 in April failed to take the wind out of the pound’s sales on Friday.

Wise Money market data coming up

The UK and US GDP reports are some of the key highlights on the economic calendar today. If US growth slows to the extent forecast in the first quarter (from 2.1% to 1.0%) GBP/USD could be headed for even dizzier heights.

The Eurozone is also set to publish inflation figures for April. In light of Draghi’s comments yesterday, slowing inflation is liable to send the euro lower. Conversely, if non-core inflation increases to 1.8% from 1.5% as anticipated the euro could bounce back before the weekend.

Looking ahead to next week and the biggest economic movers of GBP exchange rates will be the UK’s services, construction and manufacturing PMIs for April. Indications that economic output is slowing would put the pound under pressure as campaigning for the UK snap election intensifies.

 

Pound returns to multi month highs before growth data

UK news might have been lacking yesterday but that didn’t stop the pound striking new multi-month highs against the Canadian, Australian and New Zealand dollars.

UK news might have been lacking yesterday but that didn’t stop the pound striking new multi-month highs against the Canadian, Australian and New Zealand dollars.

Sterling was also able to claw back some of this week’s losses against the euro and edge higher against the US dollar.

GBP/EUR advanced from €1.1731 to €1.1817, GBP/USD jumped from $1.2807 to brush $1.2900, GBP/AUD hit AU$1.7233 (its best level since September 2016), GBP/NZD gained two cents to achieve NZ$1.8676 (its strongest rate since last July) while GBP/CAD remained close to seven-month highs at C$1.7475.

Signs that the post-Brexit economic slowdown predicted before the EU referendum is becoming reality would be pound-negative and may leave GBP exchange rates softer before the weekend.

A blank economic calendar for the UK left the pound to be moved by external developments yesterday, and a combination of profit-taking, US news and trade concerns ensured the British currency came out on top against most of its rivals.

While the euro edged away from its recent highs ahead of the European Central Bank’s (ECB) interest rate decision, demand for the US dollar eased as President Donald Trump unveiled disappointing tax plans.

The main development was the decision to slash US corporation tax from 35% to 15%, but fears that this move could result in a ballooning US budget deficit left the US dollar struggling.

Meanwhile, a tweet from Trump condemning Canada’s perceived injustices against US dairy farmers inspired concerns that New Zealand (the world’s largest exporter of dairy products) could come under fire next, resulting in significant New Zealand dollar losses.

Demand for the Australian dollar also remained tepid after domestic inflation data fell short, reducing the odds of the Reserve Bank of Australia (RBA) increasing interest rates.

 

Wise Money market data coming up

Today’s big news item is the European Central Bank’s (ECB) interest rate decision. No changes to monetary policy are expected, but the tone and content of President Mario Draghi’s accompanying statement could inspire euro movement.

Any hints that the central bank is preparing to taper its quantitative easing programme would give the euro a boost and could drive GBP/EUR back to this week’s lowest levels.

Other news includes US trade balance, wholesale inventories and durable goods orders data. A trio of positive results would support US interest rate hike expectations and could give the US dollar a bit of a lift.

We’ll finally see some UK data on Friday, in the form of the GfK consumer confidence index and the nation’s first quarter growth data.

Signs that the post-Brexit economic slowdown predicted before the EU referendum is becoming reality would be pound-negative and may leave GBP exchange rates softer before the weekend.

Trump trade concerns send GBP higher vs. CAD, AUD, NZD

Although the pound failed to recover losses against the euro on Tuesday, the currency did manage to return to multi-month highs against the US, Australian, Canadian and New Zealand dollars.

Although the pound failed to recover losses against the euro on Tuesday, the currency did manage to return to multi-month highs against the US, Australian, Canadian and New Zealand dollars.

GBP/EUR spent most of the day below the €1.1750 level, GBP/USD rallied from $1.2803 to $1.2843, GBP/AUD advanced to AU$1.7105 (close to 2017 highs), GBP/NZD surged from NZ$1.8349 to NZ$1.8581 (its best levels since August 2016) and GBP/CAD achieved a high of C$1.7488.

Trump’s hotly-anticipated tax proposals are also due to be divulged. If they are viewed as having the potential to bolster the US economy, the US dollar could rally.

After last week’s significant pound gains the last few days have proven quite tame in terms of currency movement.

The euro was still riding high on Tuesday on the back of the outcome of the first round of the French general election and GBP/EUR recorded further losses.

However, the pound was able to advance on some of the other majors after UK data showed that Chancellor of the Exchequer Philip Hammond had hit his budget target for the 2016/2017 financial year. Although public sector net borrowing increased by more-than-expected in March, over the year as a whole it was down 28% on 2015/2016.

In fact, borrowing was at its lowest level since before the global financial crisis in 2008.

This, in combination with a drop in US consumer confidence, helped the pound climb against its US rival.

Sterling’s gains against the Canadian dollar, Australian dollar and New Zealand dollar were also the result of developments in the US.

A lumber dispute between the US and Canada sent the Canadian dollar lower and increased concerns of trade disputes developing between the US, Australia and New Zealand.

The Australian dollar came under further pressure after domestic inflation figures proved lower than forecast in the first quarter of 2017.

 

Wise Money market data coming up

The UK data calendar is light again today, with no notable reports to be aware of.

The US is set to release MBA mortgage application figures and crude oil inventories numbers, and Canada will be publishing its retail sales stats from February.

However, the main cause of currency movement in the hours ahead could be President Donald Trump’s meeting about North Korea. All senators have been called to attend the unusual gathering at the White House later today, although at the moment the agenda remains uncertain.

Trump’s hotly-anticipated tax proposals are also due to be divulged. If they are viewed as having the potential to bolster the US economy, the US dollar could rally.

According to Lloyds; ‘Reports suggest that he plans to unveil tax cuts, including a 15% corporation tax rate, and a 10% repatriation tax on companies’ stockpile of overseas earnings, although a border-adjustment tax may not be forthcoming. These measures were discussed with Congressional leaders yesterday, some of whom may question whether the proposed fiscal measures are revenue neutral.’

 

Euro holding election gains, pound recovers losses against US dollar

The euro started the week strongly, but the same couldn’t be said for the pound.

The euro started the week strongly, but the same couldn’t be said for the pound.

After spending most of last week holding multi-month highs, Sterling dropped against the euro and put on a mixed performance against several of the other major currencies.

GBP/EUR brushed a low of €1.1771 and closed the day at €1.1757, GBP/USD fell to $1.2775 before bouncing back above $1.28, GBP/AUD fluctuated between AU$1.6885 and AU$1.6993 while GBP/NZD managed to climb from NZ$1.8185 to NZ$1.8408.

While the pound fell by over 1% against a rallying euro, the British currency was able to claw back some of its losses against the US dollar as Federal Reserve rate hike expectations remain deflated.

The euro was Monday’s currency winner, recording (and holding) notable gains against the majors thanks to the outcome of Sunday’s first round of voting in the French election.

With one of the anti-EU candidates, left-wing Jean-Luc Melenchon, out of the running, the odds of a ‘Frexit’ were reduced, and demand for the common currency surged.

Although far-right Marine Le Pen made it through to the second round, recent polls see her commanding just over 30% of the final vote – with centrist Emmanuel Macron taking more than 60%.

In a surprising move, Le Pen has temporarily stepped down as leader of the National Front in hopes that campaigning ‘above partisan considerations’ will encourage supporters of the defeated candidates to back her when it’s time to return to the polls.

While the pound fell by over 1% against a rallying euro, the British currency was able to claw back some of its losses against the US dollar as Federal Reserve rate hike expectations remain deflated following President Donald Trump’s recent comments about preferring a low interest rate policy.

The only UK data of the day revealed that the post-referendum depreciation in the pound meant that factories experienced the best three month period for exports for more than six years between February and April. Less positively, plans for investment have fallen dramatically in response to continued uncertainty about the UK’s future trading relationship with the EU.

Wise Money market data coming up

UK public borrowing figures could have an impact on the pound in the hours ahead, but other than those numbers the only potentially currency-moving data on the calendar for today is the US consumer confidence report for April.

Although sentiment is believed to have fallen, if the gauge comes in at 122.5 (as expected) it will still be above the historical average.

The GBP/AUD exchange rate is likely to experience volatility overnight as RBA Governor Philip Lowe delivers a speech and Australia publishes inflation data for the first quarter.

If Lowe hints that concerns about the domestic housing and labour market could warrant a change in monetary policy, we could see significant movement from the Australian dollar.

The next UK news of note – consumer confidence figures and domestic growth data for the first quarter – isn’t due for release until Friday so in the meantime political developments and external events are likely to be the main cause of GBP fluctuations.

 

Euro jumps on French election results

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

GBP/EUR dropped from €1.1948 to €1.1790, GBP/USD dipped from $1.2854 to $1.2777, GBP/AUD slumped from AU$1.6990 to AU$1.6897 and GBP/NZD eased slightly from NZ$1.8292 to NZ$1.8177.

GBP/EUR dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

After surging on the back of optimism surrounding the UK’s snap general election, demand for the pound eased slightly on Friday following a less-than-impressive domestic retail sales report.

The data showed an unexpectedly steep slump in consumer spending in March, and some believe this heralds the beginning of the general Brexit-inspired economic slowdown predicted before the referendum.

Although pound losses were limited by hints from a Bank of England (BoE) policymaker about his plans to vote for higher borrowing costs in the near future, GBP exchange rates were left down on the week’s best levels.

GBP/EUR then dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

With centrist Emmanuel Macron and far-right Marine Le Pen making it through to the second round, and Macron expected to triumph in the second vote, the odds of France exiting the EU fell significantly. The euro jumped by over 1% against the pound, US dollar, New Zealand dollar and Swiss franc on the news.

 

Wise Money market data coming up

Today’s economic calendar highlights are German IFO business surveys, UK Confederation of British Industry (CBI) reports and Canadian wholesale sales data.

The German IFO gauges of business climate and expectations are expected to show improvement in April, while the UK’s business optimism, trends total orders and trends selling price figures are all forecast to dip.

If these predictions prove accurate the pound could extend losses against the euro as trading continues.

As last week’s Canadian inflation data fell short of the mark (leaving the Canadian dollar broadly weaker) another disappointing domestic report may help the pound recoup some of today’s losses against the ‘Loonie’.

 

Euro runs into trouble as ECB dismisses idea of policy change

After a mixed day of trading the GBP/EUR exchange rate managed to just about hold €1.17 (although this was largely due to euro weakness).

After a mixed day of trading the GBP/EUR exchange rate managed to just about hold €1.17 (although this was largely due to euro weakness).

GBP/USD failed to climb back above the $1.25 level and GBP/NZD slid from its 2017 high, but GBP/AUD did push from AU$1.6471 to AU$1.6559.
Meanwhile, a one-month high for oil prices drove GBP/CAD from C$1.6793 to a low of C$1.6682.
A widening deficit or a slower pace of domestic growth may counter any positive impact from the production numbers.
The UK’s economic calendar was empty yesterday, leaving the pound to move at the mercy of external events.
GBP sentiment was solid mid-week thanks to the UK’s impressive service sector report, but concerns about overall growth slowing in the first quarter of 2017 left the pound fluctuating as the weekend approached.
Sterling was eventually able to march higher against the euro however as officials from the European Central Bank (ECB) indicated that the institution is happy with current monetary policy and has no plans to either taper quantitative easing or increase interest rates in the near future.
Draghi left the euro struggling when he stated; ‘We are confident that our policy is working and that the outlook for the economy is gradually improving. But even so, we have not yet seen sufficient evidence to materially alter our assessment of the inflation outlook – which remains conditional on a very substantial degree of monetary accommodation. Hence a reassessment of the current monetary policy stance is not warranted at this stage.’

ECB Vice President Vítor Constâncio and Executive Board Member Peter Praet supported the view that borrowing costs aren’t likely to be altered any time soon. As well as dipping against the pound, the euro fell to a low of 1.0627 against the US dollar.

Wise Money markets data coming up

Before we kick back for the weekend we could see a final flurry of pound movement thanks to the UK’s industrial and manufacturing production numbers. Both measures have been forecast to show growth in February – a result that could be pound positive.
However, the day’s UK trade data and NIESR GDP estimate for March may limit pound gains if they show a widening deficit or a slower pace of domestic growth.
A speech from Bank of England (BoE) Governor Mark Carney is also on the horizon and his tone on the subject of interest rates could be key to how the pound closes out the week. Hints of a rate hike could send the pound soaring, but indications that rates are going to remain on hold for the foreseeable future would be negative for GBP.
There’s also some high-profile US news to focus on, in the form of the nation’s non-farm payrolls report. As solid growth in the labour market might convince the Federal Reserve that more than three rate hikes will be necessary in 2017, the US dollar could stop the pound breaching $1.25 if the NFP report exceeds expectations.
Finally, GBP/CAD volatility may follow the publication of Canada’s own jobs data. The unemployment rate is believed to have increased in March and (if that proves to be the case) the pound could close out the week trading higher against the Canadian dollar.

Pound dips on UK manufacturing slump

After starting the week strongly, the pound spent Monday sliding against currencies like the US dollar and euro.

After starting the week strongly, the pound spent Monday sliding against currencies like the US dollar and euro.

The GBP/EUR currency pair fell from a high of €1.1741 to a low of €1.1636, while GBP/USD snuck back below the key $1.25 level to trade in the region of $1.2442.

The pound’s losses against the commodity currencies were less significant, with GBP/AUD managing to return to trading at AU$1.6438 following the Reserve Bank of Australia’s (RBA) interest rate decision. GBP/CAD also held pretty steady as the resumption of oil production in Libya saw the price of Canada’s core commodity dip.

A construction PMI reading of less than 52.5 could see the pound extend its recent losses against the euro and US dollar.

The main cause of the pound’s Monday downtrend was the UK manufacturing PMI from Markit.
The gauge had been forecast to come in at 55, but it actually fell to 54.2 in March. February’s figure was also negatively revised to 54.5.
Although the report contained a fair few positives, it also indicated that growth in the sector is expected to keep easing.
Markit Senior Economist Rob Dobson noted; ‘With growth losing further momentum in March, that weaker trend is likely to continue into the second quarter. The latest survey also clearly shows that high costs and weak wage growth are sapping the strength of consumers, with rates of expansion in output and new orders for these products slowing further.’
Meanwhile, the euro was supported by a decline in the Eurozone’s unemployment rate from 9.6% to 9.5%. The currency bloc’s manufacturing PMI also came in at its best level in six years.

Over in Australia, a disappointing Australian retail sales report was swiftly followed by the Reserve Bank of Australia’s (RBA) latest interest rate decision. While the central bank left interest rates on hold, the concerns it expressed about Australia’s housing market kept the ‘Aussie’ under pressure.

Wise Money market data coming up

Today’s main UK news is the nation’s construction PMI for March. The index is expected to come in at 52.5, unchanged from February.
While the UK construction sector only accounts for around 6% of total economic growth, a below-forecast reading would increase concerns that tomorrow’s much more influential services PMI will also show a slide in output.
Subsequently, a reading of less than 52.5 could see the pound extend its recent losses against the euro and US dollar.
However, the GBP/EUR pairing could fight back in the afternoon if the Eurozone’s retail sales stats disappoint or if European Central Bank (ECB) President Mario Draghi indicates that monetary policy is unlikely to be adjusted for the foreseeable future.
The GBP/USD exchange rate could also experience further movement before the end of the day as the US publishes its factory orders and durable goods orders numbers for February.

Is the pound headed for new highs this week?

A Sterling surge before the weekend helped the pound close out the week in a stronger position against the euro and recover earlier losses against both the US and Australian dollars.

A Sterling surge before the weekend helped the pound close out the week in a stronger position against the euro and recover earlier losses against both the US and Australian dollars.
Over the last seven days GBP/EUR has recovered from €1.1451 to hit highs of €1.1741 while GBP/USD returned to trading in the region of $1.2526 after dropping to lows of $1.2385. GBP/AUD also bounced back from its worst levels of AU$1.6185 to trend in the region of AU$1.6470.

But can the pound’s run of gains continue? If these reports show that the UK economy closed out the first quarter of 2017 in a strong position, the pound’s recent run of gains could continue.

The pound ended the week on a high thanks to the UK’s latest current account report. One of economists’ big concerns about the post-referendum period was that the current account deficit could spiral, so the news that the shortfall actually shrank from -£25.7 billion in Q3 to -£12.1 billion in Q4 gave Sterling a significant boost.

The UK’s Q4 growth data was more mixed, with the rate of quarter-on-quarter expansion coming in at 0.7% (as forecast) but annual growth being revised down to 1.9%.
The pound’s gains against the euro were also the result of the Eurozone’s inflation stats showing a sharper-than-anticipated slowing in consumer price pressures. The CPI dropped from 2.0% to 1.5% in March.

Wise Money market data

There are quite a few influential data releases to focus on today, including the UK’s manufacturing PMI and the Eurozone’s unemployment figures.
Over in the US we also have the Markit manufacturing and composite PMIs, the ISM manufacturing PMI and the ISM employment report.
The UK’s manufacturing PMI will be followed by its construction and services equivalents later in the week. If these reports show that the UK economy closed out the first quarter of 2017 in a strong position, the pound’s recent run of gains could continue.
As the UK’s services sector accounts for over 70% of GDP, a strong showing from this measure could push GBP exchange rates to new highs.
However, economists have forecast that today’s Eurozone unemployment data will show a decline in joblessness from 9.6% to 9.5%. If that proves to be the case it could undermine some of the recent strength in the GBP/EUR exchange rate. Similarly, upbeat manufacturing data from the US would be US dollar supportive, potentially pushing GBP/USD back below $1.25.

Pound hits March high vs. euro

The beginning of Brexit didn’t faze the pound yesterday, with the currency racking up gains all over the place.

The beginning of Brexit didn't faze the pound yesterday, with the currency racking up gains all over the place.

GBP/EUR achieved its best levels of March, surging from a low of $1.1550 to hit $1.1700. While the pound wasn’t able to return to trading above $1.2500 against the US dollar it did gain half a cent despite a sturdy US growth figure.

Sterling stormed higher against the New Zealand dollar, rallying almost 2 cents to achieve a best rate of NZ $1.7890. GBP/AUD gains were slightly less impressive, with the pound failing to hold a high of A$1.6352 and closing the day at AU $1.6267.

What’s been happening?

Although the UK is now facing two years of potentially arduous Brexit negotiations, the pound is currently benefiting from the pretty friendly tone of initial communications between Britain and the EU.

Lloyd’s of London did announce that it would be relocating jobs to Brussels, but markets were cheered by the governmentís plan to implement the ‘Great Repeal Bill’ in May – a move which will turn an epic list of EU laws into British ones.

The pound was also able to advance on the euro due to a disappointing set of inflation figures for Germany. With the nation’s consumer price index decelerating by significantly more than expected, hopes that the European Central Bank (ECB) will tighten stimulus in the near future dimmed, and the euro softened accordingly.

In terms of UK data, the GfK consumer confidence index held at -6 in March rather than sliding to -7 as forecast. The Lloyds business barometer was less reassuring however, dropping from 40 to 35.

What’s coming up?

Already today Nationwide house price figures have fallen short of the mark, with property prices sliding -0.3% on the month (instead of climbing 0.3%) and rising 3.5% on the year (down from price growth of 4.5% in February).

Currency volatility could be on the horizon next week thanks to a number of high-profile data releases. For the UK we’ve got manufacturing, construction and services PMIs, manufacturing/construction output numbers and trade balance figures. If the UK’s PMIs show that growth in the nation’s three key sectors remained robust in March, it would up the odds of more Bank of England (BoE) policymakers voting for higher borrowing costs and give the pound a boost.

The Eurozone will be offering up unemployment and retail sales numbers, along with German factory orders and construction stats. Meanwhile, US dollar fluctuations are most likely to occur in response to the US non-farm payrolls data. Sturdy employment figures would support Fed rate hike expectations (and the US dollar) while any sign of weakness in the labour market could put the plan for two further rate hikes in jeopardy and leave USD exchange rates weaker.

Pound steady as Article 50 trigger date approaches

Although we’re now only six days away from the long-awaited activation of Article 50, the pound is proving resilient and its best levels of the week could be yet to come.

Although we’re now only six days away from the long-awaited activation of Article 50, the pound is proving resilient and its best levels of the week could be yet to come.

Sterling edged slightly lower yesterday as excitement over the inflation surge eased. However, GBP largely returned to opening levels before the close of the European session despite the UK being shaken by a terror attack in London.

GBP/EUR was holding ‘1.1546, GBP/USD remained close to $1.2500 and GBP/AUD held firm above AU$1.6250.

What’s been happening?

After the flurry of activity inspired by the UK’s inflation report earlier in the week, trading was a little flat on Wednesday.

A lack of high-profile data prevented the pound advancing further as the eyes of the world turned to the shocking events that took place outside the Parliamentary building in London.

Meanwhile, the decline in bets that the Federal Reserve will increase interest rates more than three times in 2017 weakened demand for the US dollar and the euro failed to display much response to a 15-month low Eurozone current account surplus.

Down in the South Pacific, the Reserve Bank of New Zealand (RBNZ) left interest rates on hold as expected. The central bankís policy statement was little changed from February, although it did seem slightly less concerned about the relative strength of the New Zealand dollar. The upshot of the announcement was that the GBP/NZD exchange rate got to hold its previous 2 cent gain.

What’s coming up?

Aside from the UK retail sales numbers, we have a speech from Fed Chairwoman Janet Yellen and Eurozone consumer confidence data on the calendar for today.

The pound could hit its highest levels of the week so far if the UK sales report shows the forecast uptick in consumer spending, but the recent terror incident may limit demand for the British currency. The pound is also liable to start feeling the pressure ahead of the weekend with the activation of Article 50 in sight.

Looking ahead to Friday weíve got a number of reports for the Eurozone to focus on.

Sturdy PMIs for the currency bloc and its major economies would be euro supportive. The only UK news will be the BBA loans for house purchase stat, which is expected to detail an increase in property lending.

As we’ve also got Canadian inflation data and US durable goods orders due for publication, USD and CAD exchange rates could be in for some movement.