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22 Mar 2015
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Dollar retreats as markets get off to a slow start

United States Dollar: There wasn’t much by way of economic releases on Friday. UK public sector borrowing data showed that the budget deficit in February fell to £6.9 billion. There wasn’t any data released from the US either and the US dollar gradually weakened throughout the day. Cable traded to a high of 1.4987 and after a couple of attempts to push higher than this, it has fallen back in Asia to open this morning at 1.4815. The focus this week will turn to UK inflation data on Tuesday and it will be scrutinised even more closely than usual after Haldane’s comments last week. PMIs from Europe and US CPI are due on the same day. The US data will also be watched closely given the Fed’s most recent statement and suggestions that the central bank is in no rush to raise rates, this despite the removal of that important ‘patient’ word. US Durable Goods, US GDP and UK Retail Sales data are released later in the week.

We expect a range today in the GBP/USD rate of 1.4800 to 1.4930

Euro: EUR/USD also gradually pushed higher on Friday. German PPI data printed a bit weaker than expected early on in the day but then European Current Account data came in mildly stronger than expectations. Moreover, it was a weakening dollar that supported the move higher in EUR/USD, as it went on to trade to a high of 1.0883 late in the day on Friday. It has fallen back a bit early this morning to open at 1.0780. As for today, there’s no data from Europe but all eyes will be on ECB President Draghi who is due to testify on monetary policy before the European Parliament. The euro has rallied fairly healthily over the last week or so, so it will be interesting to see if this continues following Mario Draghi’s comments this afternoon.

We expect a range today in the GBP/EUR rate of 1.3710 to 1.3800

Aussie and Kiwi Dollars: Both AUD/USD and NZD/USD have made steady gains since Friday morning. NZD/USD spiked overnight following a flurry of buying activity, eventually topping out at .7664. Both currencies have fallen back in early Europe however and open in London at .7770 and .7575 respectively. There isn’t much by way of data this week from Australia or NZ. The RBA Financial Stability Review is due on Wednesday but that’s about all there is for main market moving fundamental news (in the calendar at least).

We expect a range today in the GBP/AUD rate of 1.9020 to 1.9200

We expect a range today in the GBP/NZD rate of 1.9500 to 1.9700

Data Releases

AUD: CB Leading Index m/m

EUR: ECB President Draghi Speaks

GBP: CBI Industrial Order Expectations

NZD: No data

USD: Existing Home Sales

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