United States Dollar: It was a quiet start to the day yesterday but as the day went on EUR/USD dropped, dragging GBP/USD lower with it. The pound fell from 1.5535 to a low of 1.5395 vs. the dollar, the move backed by a solid U.S. durable goods orders report. The data showed that orders rose a seasonally adjusted 2.8% in January vs. expectations for 1.7%, supported by a surge in demand for core capital goods. Other data, released at the same time, showed that the consumer price index fell 0.1% in January from a year earlier, this being the first year-over-year decrease since October 2009. Unsurprisingly, the fall in prices was in large part due to the fall in energy and gasoline prices and although the Fed saw this coming it will no doubt be an underlying concern for Janet Yellen. That said, the inflation data – as well as weaker unemployment claims data – was shrugged off and the dollar continued to strengthen across the board yesterday afternoon. Next up we have U.S. Prelim GDP, due at 1:30 this afternoon. The underlying fundamentals have been relatively strong recently, certainly when compared to other regions such as the Eurozone. If this is reflected in GDP this afternoon we could well see the dollar momentum continue as the week comes to a close.
We expect a range today in the GBP/USD rate of 1.5340 to 1.5520
Euro: EUR/USD collapsed yesterday as various technical levels were knocked out and sentiment towards the euro turned even more negative. After opening the day on Thursday at 1.1375 the pair fell to an eventual low of 1.1184. In other news yesterday, stronger than expected German unemployment change data was largely ignored as sellers piled in as the day wore on. The sell-off in EUR/USD has meant that GBP/EUR has pushed even higher and it traded above 1.37 yesterday. It went on to trade to a high of 1.3777 early this morning and but has lost a bit of ground, due in the main to a bit of profit taking on short euro positions but also in response to various sets of regional German inflation data. Hesse CPI printed at +1.0% vs. a previous reading of -1.0% month on month. Spanish CPI has also printed stronger than market forecasts this morning.
We expect a range today in the GBP/EUR rate of 1.3680 to 1.3780
Aussie and Kiwi Dollars: AUD/USD and NZD/USD have both fallen over the last 24 hours, in line with the sell-off in EUR/USD and general USD demand. The AUD was also weighed by growing expectations that the RBA will cut rates again next week at their monetary policy meeting. These rumours and expectations weighed on the kiwi too and despite the release of relatively strong ANZ business confidence data overnight. NZD/USD opens this morning at .7550 and AUD/USD sits at .7825 currently.
We expect a range today in the GBP/AUD rate of 1.9600 to 1.9790
We expect a range today in the GBP/NZD rate of 2.0300 to 2.0600
AUD: No data
EUR: Italian Prelim CPI m/m
GBP: No data
NZD: No data
USD: Prelim GDP q/q, Chicago PMI, Pending Home Sales m/m, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations
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