05 Feb 2017

Central Banks remain in focus.

United States Dollar:

We have seen a busy few days for the US with Trump’s immigration ban remaining in focus. A federal judge has overruled his executive order, stating that the ban was unconstitutional. It seems that Trump may have underestimated the system of checks and balances and this may be a key theme going forward if Trump continues to sign controversial orders. Political uncertainly continues as tensions between the US and Iran continue to rise. Pressure in the Middle East will do little to subdue scepticism regarding current US political capabilities. Last Friday’s US jobs report appeared to show a positive reflection on employment with Non-Farm payrolls rising to 227K from a previous figure of 156K. However beneath this headline figure cracks were highlighted with wage growth slowing down and under-employment remaining high. The odds of a March rate hike have certainly fallen off the back of these figures as investors anticipate that the Fed will approach any rate decision with caution moving forward.


Last week saw the bank of England maintain rates, showing a relatively dovish stance. Carney was equally dovish stating that the possibility of a rate move in either direction remains a possibility. This weighed on the pound Thursday, however sterling was able to recuperate part of these losses on Friday due to mixed employment figures from the US. The only major release this week for the UK will come in the form of Manufacturing Production m/m. Due on Friday, this figure is due to fall from 1.3% to 0.3%. This week markets will turn attention to a three-day parliamentary debate which is due to begin today. This debate will focus on legislation that will allow Theresa May to begin formal negotiations and officially enact Brexit. News from this debate will likely be a market mover with investors keeping an eye on whether conservative MP’s support or oppose May’s plans. GBP/USD is currently trading at 1.2472.

We expect a range today in the GBP/USD1.2475 to 1.2495


A quiet day for the euro on Friday left the currency at the mercy of wider economic events. The euro was able to make slight gains against the US dollar and sterling as employment figures from the US failed to inspire. German factory orders came in above forecast today at 5.2%, up from a previous figure of 3.6%. With little else on the calendar today investors will focus on the political landscape of both the US and the UK. GBP/EUR is currently trading at 1.1607.

We expect a range today in the GBP/EUR rate of 1.159 to 1.165

Aussie and Kiwi Dollars:

Central Banks will be the main focus for this week with both Australia and New Zealand scheduled to make rate announcements. On Tuesday The Reserve Bank of Australia will likely hold rates at 1.5% due to poor wage growth and slow expansion. The RBNZ are also due to maintain rates on Wednesday. This is following the central bank’s previous decision to cut rates to 1.75% due to global uncertainty. Expect slight volatility in the build up to these announcements. GBP/AUD is currently trading at 1.6269. GBP/NZD is currently trading at 1.7041.

We expect a range today in the GBP/AUD rate of 1.62 to 1.63

We expect a range today in the GBP/NZD rate of 1.70 to 1.7125

Data Releases

AUD: Rate Decision - 3:30am (GMT) Tuesday

EUR: No data

GBP: No data

NZD: No data

USD: No data


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