United States Dollar:
The dollar remained broadly lower against other major currencies on Thursday, despite the release of mostly positive U.S. data and amid sustained expectations for a near-term U.S. rate hike. The U.S. Department of Labor said initial jobless claims increased by 5,000 to 239,000 in the week ending February 11 from the previous week’s total of 234,000. Analysts expected jobless claims to rise by 11,000 to 245,000 last week. In addition, the Philadelphia Federal Reserve said its business conditions index jumped to 43.3 this month from 23.6 in January, which was the highest level since November 2014. Economists had expected a reading of 18.0 this month. Data also showed that building permits issued jumped by 4.6% to 1.285 million units last month from 1.210 million in December. However, U.S. housing starts fell by 2.6% to 1.246 million units last month from December’s total of 1.279 million units. It’s been a relatively positive week for the Greenback but we haven’t seen the gains we would have expected; the dollar did rally in spurts but the surge lacked strong conviction. This shows that the market is still trying to work out the implication of President Trump's policies, of which his approach to trade may not be supportive for the dollar. EUR/USD was up 0.44% at 1.0647, off the previous session’s one-month trough of 1.0520 and GBP/USD has failed to break back into the 1.25’s seen earlier in the week, we currently sit at 1.2485.
We had nothing on the docket yesterday for the UK hence Sterling’s moves were very limited. We did hear from the European Commission President, Jean-Claude Juncker, he believes it will take longer than two years to agree on all the arrangements for Britain to leave the European Union. "I do not think we will succeed within 24 months to clear up the arrangements for Britains exit from the EU and to (forge) the whole relationship between Britain and the European continent," he said in a speech on the sidelines of the international Munich Security Conference. In other developments surrounding Brexit, China and Britain have pledged to promote free trade and cooperate on building an open world economy. China is one of the countries Britain hopes to sign a free trade agreement with once it leaves the European Union, and London and Beijing have been keen to show that Britains withdrawal from the bloc will not affect ties. On to today and we see the release of Retail sales. It feels as though the Pound is clinging on this week after poor wage data earlier and there is a possibility it could diminish further in response to the UK retail sales figures for January if spending shows signs of having weakened already. The number will be printed at 9.30am.
We expect a range today in the GBP/USD 1.2350 to 1.2550
Moves in the Euro yesterday had been spurred on by the strong US domestic data and profit taking above the 1.18 level of GBP/EUR. This week we have seen highs of 1.1824 but since the mid-week highs we have seen it reverse and we currently sit at 1.1712. Moves have been predominately determined by external factors with a lot of uncertainty still surrounding the single currency. On Thursday, European Union officials urged Greece and its lenders to conclude a long-overdue bailout review quickly to safeguard economic recovery but Athens said it wouldnt ask "a euro more" from its austerity-wracked citizens. Inconclusive talks between Greece and its international creditors on economic reforms and debt relief are in danger of retriggering the crisis that almost ended in Greece being pushed out of the euro zone two years ago. Political tension continues in France too. Fillons status as favourite to win the presidency in May has evaporated in the past three weeks over whether or not his wife did real work for hundreds of thousands of euros in taxpayers money when she was paid as his assistant. The issue has also sown concern among investors that the anti-Europe, anti-euro Marine Le Pen of the National Front could win the presidency. She has moved up in the polls but remains well behind.
We expect a range today in the GBP/EUR rate of 1.1680 to 1.1780
Aussie and Kiwi Dollars:
The Australian dollar’s upward trajectory continued throughout Thursday’s domestic session advancing through 0.77 U.S cents. Lingering U.S profit taking mixed with upbeat labour market data helped bolster demand for the higher yielding unit and the AUD touched three month highs. Opening this morning buying 0.7697 U.S Cents attentions turn to next week’s RBA minutes as a marker for further direction.
Domestic data for the Kiwi this week has been thin and reaching a high of 0.7242 when valued against its US Counterpart on Thursday the New Zealand dollar has done well to maintain its value up above the psychologically important threshold at the 72 US Cents mark over the past 48 hours. Retail sales overnight showed an increase of 0.8% but fell short of the 1.1% that had been forecast. With rate rise rumours from the US and lack of rate adjustment from the RBNZ the Kiwi has remained under pressure throughout this week.
We expect a range today in the GBP/AUD rate of 1.6140 to 1.6340
We expect a range today in the GBP/NZD rate of 1.7210 to 1.7450p>
AUD: No data
EUR: Current Account
GBP: Retail Sales m/m
NZD: No data
USD: CB Leading Index m/m
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