Corporate

28 Feb 2017
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Focus on US Q4 GDP and Trump’s speech to Congress

US Dollar

Expected Range 1.2365 - 1.2480

Continuing concerns over a second Scottish referendum continue to weigh on Sterling with GBP/USD trading a fairly tight 35 point range between 1.2415 and 1.2450 overnight.  Yesterday afternoons weaker than expected US durable goods orders and pending home sales, for January, did provide a brief respite for pound, however, the news only helped the currency carve out a slight rally before falling away again.  Durable Goods Orders excluding Transportation posted -0.2% vs 0.5% expected and 1.3% down from the previous month’s revised figures.  Month on Month pending home sales also posted far below expectations with a fall of 2% from 0.8% to -2.8% for January.

Today sees another clear data docket from the UK so all attention will be on this afternoon's US 4th Quarter preliminary GDP and Personal Consumption Expenditures plus US president Donald Trump’s speech to congress overnight.  Markets expect US GDP to hold at 2.1% however if the positivity surrounding the US economy translates to a higher GDP print then it is likely to fuel further speculation of a Fed interest rate hike sooner rather and later.

We open today with GBP/USD at 1.2430. 

Euro

Expected Range 1.1680 - 1.1780

GBP/EUR continued to trade lower through yesterday’s sessions as a combination of positive Eurozone economic sentiment and Confidence surveys plus fears of a 2nd Scottish referendum helped the Single currency.  Early Monday trading saw sterling-euro hold just above 1.18 but steadily tailed off, hitting an intraday low of 1.1715. Overnight the pound found a little support currently sits between its overnight range of 1.1725 and 1.1755. 

The Euro weakened against its US counterpart on concerns about upcoming political events, with polls showing independent candidate Macron leads over the Republican Fillon and shortens the gap against the National Front Leader Marine Le Pen. Many believe if Le Pen does win, she could lead France out of the Eurozone, EUR/USD retracted from 1.0630 to 1.0580.  As with GBP/USD the dollar’s gains were slightly curtailed by lower than expected US durable goods orders and pending home sales.

Looking ahead to today no further is data due from the Europe or the UK so markets will focus on US 4th Quarter preliminary GDP and Personal Consumption Expenditures plus Trump’s first major policy address to Congress.  The later will be keenly watched for further clues on his key policy agenda, such as tax reforms and infrastructure spending. 

 We open today with GBP/EUR at 1.1740 and EUR/USD at 1.0590.

Australian Dollar

Expected Range 1.6075 - 1.6275

The Australian dollar enjoyed a quiet start to the week maintaining a tight 30 point range throughout trade on Monday. With little macroeconomic data on hand, the AUD again tested resistance approaching 0.77 U.S cents before edging lower into the Northern Hemisphere session. Markets were steady as investors square positions ahead of what should be a busy week headlined by commentary for US President Donald Trump and fourth quarter GDP numbers from both Australia and the US. 

We open today with GBP/AUD at 1.62

New Zealand Dollar

Expected Range 1.7225 - 1.7425

The New Zealand dollar consolidated its position above 0.72 US cents, trading sideways in a tight twenty-point range in domestic trading on Monday. Visitor arrivals were positive for the month of January, boosted by annual Chinese New year holidays. Main movements overnight were US dollar weakness due to a combination of disappointing core durable goods orders and home sales in the United States.  NZD briefly touched 0.73 US cents gave up some of its gains after disappointing trade balance figures for January.

 We open today with GBP/NZD at 1.73.