08 Aug 2017

Political tensions rise but the USD remains strong. 

US Dollar

Expected Range 1.2950 to 1.3040

Markets turned focus firmly to the political landscape yesterday, most notably, towards tensions between the US and North Korea. Leaders of both nations have openly discussed the topic of nuclear weapons in the past but as news emerges of North Korea now having the ability to launch a nuclear attack on mainland US, tensions are increasing to a new level. The Dollar surprisingly has remained strong showing little signs of slowing down, although gold prices have seen a dramatic rally which shows markets are edging towards a risk on approach today. We had only minor releases from the US yesterday including JOLTS Jobs Openings which increased above forecast to 6.16M, up from 5.70M. This helps bolster the Payroll figures released on Friday and will give investors more confidence in the US employment market. The US is likely to remain dominant today as we see a number of data releases, including Prelim Nonfarm Productivity which is due to rise and Prelim Unit Labor Costs which is due to fall.  Markets will pay close attention to these figures however it is unlikely that they will motivate any major movement as sentiment continues to drive the currency. 

We have another slow day from the UK today with no releases scheduled. With little on the cards yesterday to discuss investors have been left at the mercy of wider economic events. With the currency in such a fragile position, we have seen sterling fall across the board and with nothing to digest today we could see this trend continue. Markets will await tomorrows release of Manufacturing Production m/m which is scheduled to increase slightly from -0.2% to 0.0%. If this figure comes in positively we may see a slight reversal of recent losses however if this falls under forecast we could see the pound fall to new lows. GBP/USD is currently trading at 1.3010. 


Expected Range 1.1025 to 1.1100

Little data out of the Eurozone this week has caused the currency to retreat as the USD rallies across the board. With only minor releases today we could see this trend continue as markets look to global sentiment for motivation. On the card, today we will see Italian Industrial Production m/m which is due to fall from 0.7% to 0.2%.  This will likely not move markets but will certainly not help to shift sentiment to the Euro’s favour. GBP/EUR is currently trading at 1.1081. 

Australian Dollar

Expected Range 1.6460 to 1.6550

Only minor releases from Australia yesterday saw attention turn to RBA Assistant Governor Kent who spoke yesterday regarding the current climate of the economy. He down played positive attributes to the Australian economy stating that it was more a case of global risks and uncertainty alongside USD depreciation. With this news, the Australian Dollar retreated. Little data of note is scheduled today from Australia which could see this trend continue. GBP/AUD is currently trading at 1.6507.

New Zealand Dollar

Expected Range 1.7720 to 1.7800

After a very slow start to the week from New Zealand markets will now pay very close attention to the RBNZ. Tonight they are scheduled to make a rate announcement and release a monetary policy statement. The central bank is likely to hold rates at 1.75% but it will be interesting to hear how they discuss the risks to growth and rising inflation. This will likely move markets overnight. GBP/NZD is currently trading at 1.7770.