United States Dollar:
The week started slowly for the US Dollar in terms of data releases with no major economic news. Yesterday did see Fed voting member Harker state that he believed we could see up to 3 rate hikes this year alone. Harker is just the last in a series of Fed members who are echoing the thoughts of Fed Chair, Janet Yellen. A hike before March is still unlikely, however this is a relatively hawkish stance taken by the Fed. Today we will see this month’s JOLTS Jobs Openings figures which are due to rise from 5.52M to 5.52M. This will likely not move markets but may help subdue concerns over the US jobs market. The key focus today will be on the US federal appeals court where Donald Trump and his legal team will attempt to re-establish his travel ban. This will be an important moment in the early Presidency of Donald Trump and will certainly be a steep learning curve regarding the democratic system of checks and balances.
Yesterday saw the first of a three day debate surrounding Brexit legislation. Lawmakers from the UK rejected the first in a series of amendments, which is seemingly becoming somewhat of a formality. More votes will occur today and tomorrow and it is likely they will continue to be passed with little opposition. Both the UK and the EU are keen to begin formal proceedings and if the next couple of days continue as planned we will be on schedule to enact article 50 on or before 31st March. Keep an eye on events in parliament today, any amendments that are upheld, although unlikely, could be seen as a delay tactic and may see sterling weaken slightly. GBP/USD is currently trading at 1.2367.
We expect a range today in the GBP/USD1.2320 to 1.2420
Little data of note yesterday from the EU shifted focus to ECB president Draghi who stated he would not counter rising inflation with tightening of monetary policy. The ECB believes this is a temporary rise and is due, in part, to a rise in oil prices. Draghi briefly retaliated to accusations of currency manipulation from the US. He rejected these claims and fired back, hinting that the proposed deregulation of banks by Trump could lead to a global recession. These global political tensions are mirrored on the domestic front with the French election fast approaching in April. This will be the main political focus over the next few months and may lead to volatility. GBP/EUR is currently trading at 1.1586.
We expect a range today in the GBP/EUR rate of 1.1550 to 1.1620
Aussie and Kiwi Dollars:
Overnight the Reserve Bank of Australia maintained interest rates at 1.5%. This is in anticipation of figures due which are likely to show a slowdown in inflation and growth. The view of the RBA is that this will be a temporary slowdown and the medium-long term view of the Australian economy is positive with the odds of a further rate cut sharply decreasing and growth predictions increasing to 3% over the next 2 years. For New Zealand we have seen Inflation expectations increase this quarter, rising from 1.7% to 1.9%. This gave the NZD a small boost overnight. This release ahead of tomorrow’s key interest rate decision will be welcome news for the Kiwi Dollar. The RBNZ are likely to maintain rates at 1.75% but we may see market movement in the build-up. GBP/AUD is currently trading at 1.6261 and GBP/NZD is sitting at 1.6969.
We expect a range today in the GBP/AUD rate of 1.6230 to 1.6300
We expect a range today in the GBP/NZD rate of 1.6950 to 1.7000
AUD: No Data
EUR: No Data
GBP: Halifax HPI m/m
NZD: No Data
USD: No Data
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