Raphael Sonabend, FX Analyst
A limited amount of data-releases yesterday saw relative quiet in the FX markets. The impact of the US’ harsh winter on data has been registered by dollar bears and the greenback saw weakness against the majority of counterparts. A strengthening dollar has unsurprisingly seen negative impacts upon exports and this adds to speculation that tomorrow’s minutes will be particularly dovish. Today’s focus will be on German ZEW economic sentiment at 10:00, Canadian manufacturing sales at 12:30 and US building permits at 12:30.
GBP/EUR: Currently trading at 1.3962
- A quiet day on the data-front saw fairly range-bound trading throughout yesterday’s session. Peaking at 1.4071 and hitting a bottom at 1.3956, the euro has since been gaining on the pound this morning.
- This morning’s euro gains are likely in anticipation of the German ZEW economic sentiment figures which will be released later this morning. With a gain from 53.0 to 58.9 predicted, the euro’s advances could push on throughout the day.
GBP/USD: Currently trading at 1.4787
- Sterling gained against the dollar throughout yesterday’s session as consistently poor US results have finally impacted upon the greenback. The empire state manufacturing index fell from 7.8 to 6.9, capacity utilisation rate declined from 79.1% to 78.9% and finally the industrial production rate saw a monthly rise from -0.3% to 0.1%. As New Orders have seen a decline and price pressures remain subdued, firms are less optimistic than they have been previously. If negative sentiment spreads to consumers, the greenback could see further weakness.
- A quieter day today will see the focus on US building permits early this afternoon, recent housing data has been below expectations and this trend could be seen again today as housing starts are forecast to decline by 0.02M.
EUR/USD: Currently trading at 1.0588
- Dollar weakness was seen in this pairing yesterday as poor US data was released throughout the day. The euro pushed the rate back above the 1.06 level as manufacturing figures came out below expectations yesterday afternoon. Pessimistic sentiment has been prevalent in recent surveys as a particularly unforgiving winter, coupled with a strong dollar, have impacted negatively upon exports.
- Euro gains could be seen again in today’s session as the German ZEW economic sentiment is forecast to rise from 53.0 to 58.9, Eurozone ZEW sentiment is predicted to increase from 52.7 to 58.2 and US housing starts is forecast to fall by 0.02M.
GBP/AUD: Currently trading at 1.9321
- Yesterday saw the rate fluctuate significantly between 1.92 and 1.94 in anticipation for the RBA minutes in the overnight session. The Bank suggested that a rate cut is more-than-likely in the wake of bleak economic growth figures. Since the announcement we have witnessed support for the Aussie, with the rate falling over a cent this morning.
- Once traders have fully digested lasts night’s announcement we expect today to remain fairly quiet as no economic data is scheduled for release today.
GBP/NZD: Currently trading at 2.0024
- This pair traded between a tight two-cent range yesterday as no data of significance was released from either country. The day closed with the Kiwi having gained just over a cent, possibly in anticipation of today’s GDT price index release.
- Data today will be dominated by New Zealand with both the GDT price index and the current account figures due. The former release could come at any time but is usually in the early afternoon, volatility could be seen prior to this. The current account figures are forecast to increase from -5.01B to -3.12B, Kiwi gains could therefore continue.
GBP/CAD: Currently trading at 1.8892
- A fairly quiet day yesterday saw the pound gain throughout, despite Canadian foreign securities purchases registering a strong increase. This morning has since seen strong Loonie gains of almost a cent, despite poor figures forecast for this afternoon.
- This afternoon’s Canadian manufacturing sales monthly figures are predicted to drop off from 1.7% to -1.1% but the Loonie’s strength this morning could suggest that this will have limited impact.
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