Archive: June2017

Sterling and Euro hold gains on Hawkish Central Bank comments

29 Jun 2017
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US Dollar

Expected Range 1.2950 – 1.3075

GBP/USD has continued its upward trajectory against the U.S Dollar reaching five-weeks highs and trading as high as 1.3011 during Thursdays U.S session. The main driver behind the move was a follow through of Bank of England governor Mark Carney’s comments that have excited markets of UK interest rate hikes down the track. In addition, we are seeing weakness in the Greenback with Trump’s failure to get his health care bill through the Senate and also Janet Yellen stating that interest rates hikes could only be gradual.  On the data front, in the U.K net lending to individuals picked up marginally vs an expected fall, unsecured credit rose by £0.2bn to £2.8bn in April and Mortgage approvals in May rose 65.2k from rev. 65.1k in April, coming in stronger than expected. Looking ahead, Current Account and final GDP numbers for quarter are due today. The GBP is being seen to have broken through the 1.2910 channel of resistance, with 1.3050 the next level of resistance.  

 

We open today with GBP/USD at 1.30.    

Euro

Expected Range 1.1345 – 1.1450

The Euro continued its strong rally up 2% to 1.1450 from its lows two days ago, against its US counterpart after, stronger German inflation figures for the month of 0.2%. With ECB President Mario Draghi signalling a possibility to start unwinding its ultra-loose monetary policy, the Euro has shown no signs of stopping its current rally.  GBP/EUR continues to hold below 1.14 but has shown improvement following BoE Governor Carneys’ comments that the MPC will debate the possibility of an interest rate hike in the ‘coming months’.   

 

The UK, Europe and US all post-medium tier data today with UK 1st Quarter GDP and current accounts, Eurozone Preliminary CPI for Jun and US Personal Income/Spending, Personal Consumption Expenditures and Chicago Purchasing Managers Index.     

 

We open today with GBP/EUR at 1.14 and EUR/USD at 1.1410 

Australian Dollar

Expected Range 1.6850 – 1.7050

The Aussie continues to be supported by a softer USD, an increase in risk appetites and a significant recovery in commodity prices.  With Sterling finding its feet again after hawkish comments from BoE Governor Carney and other MPC members, GBP/AUD pulled back from week lows of 1.6720 to hold between 1.69 and 1.70.  It is highly likely that Sterling Aussie would be trading above 1.70 today if it wasn’t for improved global risk appetite and commodity prices plus overnight Manufacturing PMI from China, posting better than expected with a reading of 51.7 vs 51 exp.  With Australia now closed for the weekend, it will be up to today’s UK GDP numbers to determine whether the pound can breach and maintain itself above the 1.70 level.    

 

We open today with GBP/AUD at 1.6925 

New Zealand Dollar

Expected Range 1.7675 – 1.7875

The New Zealand Dollar is trading lower this morning against all the major currencies. The Kiwi dropped down against the Greenback falling to a low of 0.7308 while GBP/NZD also hit 1.7825 during early trading.  Overnight NZ Building permits, the number of permits for new construction projects, continued to be positive at 7%.  This helped the Kiwi regain some ground.  Attention now turns to UK GDP numbers and US Consumption Expenditures ahead of the weekend close.   

 

We open today with GBP/NZD at 1.7755.

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Sterling rallies on Hawkish BoE Governor Carney comments

28 Jun 2017
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US Dollar
Expected Range 1.29 to 1.3050
GBP/USD reached a fresh three-week high, pushing above the 1.29 level, a high not seen since the UK election earlier in the month.  The main catalyst for the move was hawkish comments from the Bank of Englan…

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Euro rallies following Draghi speech

27 Jun 2017
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US Dollar
Expected Range 1.2735 to 1.29
The Great British Pound has found further upside when valued against its US counterpart over the past 24 hours, trading as high as 1.2860 versus the Greenback. On the data front, British CBI Realized Sales picked…

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Attention on Central banks as Draghi, Carney and Yellen speak

26 Jun 2017
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US Dollar
Expected Range 1.2675 to 1.2825
GBP/USD experience a pretty lacklustre session through yesterday trading as a relatively clear data docket and minimal political activity provided little direction.  Starting the day at 1.2759, Sterling ta…

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Pound climbs steadily as week comes to a close

22 Jun 2017
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US Dollar

Expected Range 1.2650 – 1.2730

It was another very quiet day for the pound (apparently everyone was at Royal Ascot) as it traded in a very narrow range against the US dollar. This was despite the morning release of UK factory orders hitting 29 year highs for this month. Whilst the city and the market welcomed this very positive news, it was not reflected in any significant uptick in GBP/USD, perhaps due to the fact that manufacturing only contributes a small portion of Britain’s GDP. Either way the news did confirm that the UK manufacturing sector is continuing to thrive in the wake of Brexit. It would appear that the main drag on the pound at the moment is the focus on Prime Minister Theresa May and the fact that she has not yet organised an agreement with the Democratic Unionist Party. With a vote on her legislation due next Thursday, it is a crucial 6-7 days for the PM where every single vote will count. Likewise, it will be a crucial and testing time for the pound. If May’s government has a rocky start to the Parliamentary session then GBP/USD could struggle and the key 1.25 resistance level could be tested.

 

The US dollar could not take advantage of the solid job data released in the afternoon either. Whilst the number of Americans who were filing for job claims only inched up by 3000, figures around 240,000 still indicate a very healthy labour market. The Federal Reserve’s James Bullard did announce in a speech that the Fed’s current interest rate rise plan is ‘unnecessarily aggressive’. Once again though, these dovish comments could not excite the market as this year he is not a FOMC voting member.

Euro

Expected Range 1.1350 – 1.1400

Friday will certainly be the Euro’s biggest day of the week as we have the important PMI figures scheduled. Yesterday was a good day for the Eurozone economy as it announced its highest levels of consumer confidence in 16 years. The fact that growth accelerated to 0.6% in Q1 of 2017, and unemployment is at a seven year low, shows that the Eurozone is recovering in a stable fashion. Despite yesterday’s positive economic data though, GBP/EUR traded in a narrow range and GBP/EUR was reflective of how subdued the market was in general.

Australian Dollar

Expected Range 1.6743 – 1.68

There was no Australian data or market news released yesterday so on Thursday the Aussie dollar’s performance was largely driven by events elsewhere coupled with the drops in iron ore and copper prices. The recent strength of the Australian dollar will put downside pressure on inflation and once again there is little Australian data out next week.

New Zealand Dollar

Expected Range 1.7400 – 1.7510

The New Zealand dollar continues to perform well and once again tested the key support level of GBP/NZD 1.74 (IB). The Kiwi strength has followed the recent outlook from the Reserve Bank of New Zealand. Indeed the RBNZ said that the stronger currency would help rebalance growth.

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Haldane’s hawkish comments drive sterling

21 Jun 2017
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US Dollar
Expected Range 1.2600 to 1.2730
It was a day of swings for the US dollar yesterday, particularly against the pound as it traded one cent either way.  US housing data did come out in the afternoon which showed unexpected strength in sales…

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Carneu causes Pound selloff

20 Jun 2017
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US Dollar
Expected Range 1.2600 to 1.2730
The Federal Reserve’s Chicago head Charles Evans spoke late on Monday evening, stating that he wanted to see more data demonstrating that inflation was picking up before agreeing to another interest rate…

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Markets look to Brexit negotiations and Macron majority

19 Jun 2017
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US Dollar
Expected Range 1.2730 to 1.2795
It was a quiet start to the week for the US dollar yesterday, with no noteworthy data released. Indeed the dollar traded throughout the day in tight ranges against the euro and pound. The influential Head of th…

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Markets gear up for central bank speeches

18 Jun 2017
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US Dollar
Expected Range 1.2745 to 1.2785
Friday was a disappointing day for the USD as it failed to finish the week with any momentum following Janet Yellen’s hawkish comments. Indeed last week was a torrid time for the USD as it lost ground aga…

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BOE rate vote takes markets by surprise

15 Jun 2017
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US Dollar
Expected Range 1.2730 to 1.2810
Overnight, the dollar remained close to two-week highs against a basket of global currencies on Thursday, buoyed by a trio of upbeat economic reports lifting sentiment on the prospect of stronger U.S. economic…

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