United States Dollar: GBP/USD dropped yesterday from an early high of around 1.5740 to test support at 1.56 by late afternoon. The only data release of note in the past 24 hours was a better than expected Industrial Production release from the States with monthly output expanding by 1.3% in November, higher than the 0.8% forecast. Things seem to have settled down with cable sitting around the 1.5650 before two days of key releases. Already this morning we have had the results of the UKs Bank Stress Test results which saw only Co-op fail of the eight banks scrutinised. We have also had the BoE Financial Stability Report this morning with Governor, Mark Carney due to speak on the report at 9am. The key release from the UK today is CPI at 9:30am which is expected to show a drop from 1.3% to 1.2%. This afternoon sees US Building Permits data from the States with an annualised 1.06M expected to have been issued for November. It is likely data from the States will have a reduced effect on the rates in the run up to the much anticipated FOMC statement tomorrow evening. The main talking point is whether policy makers will remove the phrase “considerable time” from the statement when referring to when the first interest rate hike will be. With recent positive jobs data and GDP figures it will be interesting to see whether they choose to remove the phrase given the tumbling price of oil is having on inflation. We will see at 7pm tomorrow evening.
We expect a range today in the GBP/USD rate of 1.5660 to 1.5755
Euro: This morning sees the German ZEW Economic Sentiment release at 10am. Last month saw a welcome improvement in the closely followed survey with this morning’s release expected to show a further improvement to 19.8 from 11.5. EUR/USD currently trades higher at 1.2475 after a better than expected German Manufacturing PMI which printed 51.2. GBP/EUR trades at 1.2543.
We expect a range today in the GBP/EUR rate of 1.2570 to 1.27
Aussie and Kiwi Dollars: Overnights Australian Monetary Policy Meeting Minutes showed little change in stance from last month. The report noted that although the Aussie had depreciated recently it was still over-valued and that the markets were expecting some easing in 2015 to stimulate the economy. AUD/USD sits at .8222 with GBP/AUD at 1.9035. The only top tier-data releases from Australia or New Zealand in the next 24 hours are the Global Dairy Trade Index and current account data from New Zealand. NZD/USD is at .7744 and GBP/NZD at 2.0212.
We expect a range today in the GBP/AUD rate of 1.8930 to 1.9160
We expect a range today in the GBP/NZD rate of 2.0080 to 2.0320
AUD: No data
EUR: German ZEW Economic Sentiment
GBP: BoE Governor Carney speaks; CPI y/y
NZD: GDT Price Index
USD: Building Permits
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