Sterling, Canadian Dollar rise on positive Brexit and NAFTA news
Once again, currency markets largely sat out the market turmoil brought about by rising fears of a trade war. While stock markets worldwide slumped in their worst week since 2016 on concerns that China could retaliate to Trump’s tariff plans, most G10 currencies remained fairly range bound with each other. The exceptions were Sterling, supported by the news of an agreement on the Brexit transition deal, and the Canadian Dollar, up sharply on strong inflation data and positive
Major currencies trade in tight ranges as markets await Federal Reserve meeting
The US Dollar, Pound and Euro all traded within in a very tight range last week amid a dearth of major news. The key March meeting of the Federal Reserve looms just ahead. Policymakers in the US are almost certain to raise interest rates on Wednesday and will also be releasing an updated ‘dot plot’, which will give us an indication as to the likely pace of additional interest rate hikes this year and next.
We did see some weakness in the Canadian, Australian and New Zealand
What to expect from next week’s Federal Reserve meeting
The US Dollar firmed against its major peers on Thursday, with a lack of any significant news flow causing investors to turn their attention to next week’s Federal Reserve meeting. The Federal Reserve is overwhelmingly expected to increase the target range for its federal funds rate again in the US on Wednesday, in what could be the first of as many as four 25 basis point rate hikes in the country in 2018. With financial markets currently fully pricing in another rate increas
Currency markets calm ahead of US inflation release today
Foreign exchange traders were in a fairly cautious mood on Monday as they awaited a potentially crucial inflation release in the US this afternoon. With Friday’s labour report showing that wage growth in the US was perhaps not quite as strong as expected, Dollar bulls will be hoping for a strong inflation release today that could keep alive the possibility of four interest rate hikes from the Federal Reserve in 2018. Analysts are eying a modest increase in the headline rate o
Easing North Korea tensions boost risky currencies
The Euro and Sterling both jumped by over half a percent against the US Dollar on Tuesday after news of talks between North and South Korea led to an improvement in sentiment towards riskier currencies. According to a report out of Seoul yesterday morning, the North and South are set to hold their first summit in more than a decade at the end of next month, with the North reportedly expressing a willingness to talk to the US regarding denuclearisation. A tweet from Donald Tru
United States awaits testimony from new Fed Chair Jerome Powell
The US Dollar edged higher against its major peers on Monday, before retracing some of its gains as investors eyed a speech by the new Chair of the Federal Reserve at 13:00 UK time today. Freshly appointed FOMC Chair Jerome Powell will be kick-starting a busy week in financial markets today when he makes his first congressional testimony before the US House of Representatives. Investors will be hanging on his every word during his first major public appearance, as they look t
US Dollar recovers after hawkish Federal Reserve
The traditional relationship between interest rates and currencies re-established itself with a vengeance last week. The minutes from the last Federal Reserve meeting left no doubt that a March interest rate hike is a foregone conclusion, and sent US yields to new year highs. The Dollar followed higher, ending the week up against every other G10 currency. Last week's loser was the Swedish Krona, down sharply on disappointing inflation data that delay the prospects for Riksban
Sterling slips after labour report, EU Parliament to offer Brexit deal
The Pound was given a boost against its major counterparts on Tuesday after a report suggested that the European Parliament will push for Britain to obtain ‘privileged’ access to the single market after it leaves the European Union. Sterling rose by around 50 pips following the publication of a report published by Business Insider yesterday morning that suggested the UK and EU could be moving towards a mutually beneficial Brexit. The European Parliament is reportedly preparin
What to watch out for in the currency markets this week
With US financial markets closed on Monday due to Presidents Day, yesterday was a fairly quiet one in the currency markets. Investors instead awaited a slew of more meaningful announcements later in the week, which could lead to a volatile few days of FX trading. US Dollar bulls will be hoping that the release of Wednesday evening’s Federal Reserve’s meeting minutes reignites some form of recovery rally in the greenback. The currency has been firmly on the back foot in the pa
Dollar struggles in spite of positive US inflation surprise
We saw some volatile trading in currency markets last week. The upward surprise in US inflation had a counterintuitive effect on the Dollar, which fell hard to new multi-year lows, before rallying equally sharply to end the week down 1.5% versus European currencies. Currency markets have turned less predictable of late, as some well-worn correlations between currencies and asset classes appear to have broken down - most notably, the one between US bond yields and the US Dolla