United States Dollar: The dollar recaptured quite a bit of ground yesterday following the post FOMC sell-off. GBP/USD started the day at 1.4915 and finished the London session at 1.4690. This came despite the release of weaker than expected US economic data by way of the Philly Fed Manufacturing Index which printed at 5.0 vs. forecasts for 7.2. The pound was further undermined following comments by BoE economist Andrew Haldane who suggested that interest rates may need to be cut to zero over coming months in order to stave off deflation. In the same breath, he said that risks to UK and overseas inflation remain skewed to the downside. GBP/USD has remained on the back foot throughout the Asia session and opens this morning at 1.4725. There’s no data of note today but there are a few FOMC members due to speak before the week is out, so we may see some volatility a bit later on and as markets start to thin out.
We expect a range today in the GBP/USD rate of 1.4690 to 1.4800
Euro: EUR/USD fell steadily lower throughout much of Thursday’s session and bottomed out at 1.0610. The Swiss National Bank announced that it would be leaving interest rates on hold on Thursday and this saw the Swiss Franc firm up and EUR/CHF fall under 1.0550. This put a bit of downward pressure on EUR/USD but most of the move was down to the recovery we saw in the greenback. Meanwhile, GBP/EUR has fallen a bit on the back of Haldane’s comments yesterday and it trades at 1.3790 currently.
We expect a range today in the GBP/EUR rate of 1.3750 to 1.3850
Aussie and Kiwi Dollars: AUD/USD and NZD/USD both fell in line with other currencies vs. the US dollar yesterday but then recovered overnight and open in London at .7675 and .7450 respectively. RBA Governor Stevens was speaking last night, although he didn’t say anything particularly positive to support the aussie dollar’s move higher. He said “the massive run-up in resources sector capital spending that was a natural response to earlier very high prices is reversing, causing a drag on demand.” Still, both currencies are stronger vs. the pound today and GBP/AUD and GBP/NZD open the session at 1.9195 and 1.9790.
We expect a range today in the GBP/AUD rate of 1.9100 to 1.9290
We expect a range today in the GBP/NZD rate of 1.9680 to 1.9920
AUD: No data
EUR: Current Account, Public Sector Net Borrowing
GBP: Public Sector Net Borrowing
NZD: No data
USD: No data
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