Nicholas Ebisch, FX Analyst
The US dollar has been appreciating steadily throughout yesterday’s session and overnight as a result of little more than recovering losses from last week. Traders will be looking toward data later in the week to gauge how strong or weak the dollar will become. The dollar has been struggling to find its real value as economic data has been varied and Federal Reserve officials are sending mixed signals lately. Australia’s central bank meeting minutes were released yesterday, which indicated that the RBA may cut interest rates yet again as soon as its May meeting, which weakened the Aussie during overnight trading. Today will see the release of German ZEW Economic Sentiment data released at 10:00 A.M., as well as Canadian Wholesale Sales m/m this afternoon.
GBP/EUR: Currently trading at 1.39394
Yesterday saw range-bound trading for this pairing, with no data of any real significance released. GBP/EUR closed at 1.3856, just 10 points below where it opened.
Today attention will be on the German ZEW economic statement (10:00). This release is expected to be an improvement from last month, with German growth being driven by falling oil prices and a weak euro. We may see some advances from the single currency if this release comes in as expected. However, these gains may be limited by the increased concern over a Greek default, with obligations totalling 3 billion euros due for the next 15 days.
GBP/USD: Currently trading at 1.487741
With no major data released from the UK or the US yesterday, the dollar regained some of the ground it lost against the pound last week. The rate decreased roughly half a cent over the course of the day.
Today will be another quiet day for US and UK data, so look to the continued influence of recent mixed US data and uncertainties about the upcoming UK elections to affect today’s market movement, which may remain range-bound.
EUR/USD: Currently trading at 1.06736
A very quiet day yesterday resulted in limited activity with the pairing seeing range bound movement throughout the day. Weakness has greeted the euro this morning, however, with continued speculation over Greece, as the ECB has stated it expects to see curbs in the absence of Greek reform progress, plunging the pairing below the 1.07 mark. Another quiet day in terms of announcements is expected today, with the most important data release coming in the form of the ZEW German economic sentiment survey at 10am, which is forecast to improve. Despite this, we expect to see continued euro weakness amidst increasing concern over Greece’s place in the eurozone.
GBP/AUD: Currently trading at 1.92904
As RBA Governor Stevens expressed a willingness to cut interest rates further in his speech yesterday, combined with the hawkish nature of the RBA meeting minutes, we saw the aussie tumble, losing almost 2 cents against the pound by 01:00 this morning before settling around the 1.93 mark.
With no UK data expected today, investors will be looking towards AUD CPI released later tonight, forecast to gain 0.1%, which could provide some resistance to the sterling gains.
GBP/NZD: Currently trading at 1.93752
The kiwi dollar followed the aussie dollar lower last night as the Reserve Bank of Australia reiterated that an interest rate cut was on the table. This followed a souring in market sentiment towards the Chinese stimulus announced over the weekend and meant that the kiwi dollar struggled for any upward momentum.
The opening of the UK markets this morning has seen the pound lose its overnight gains and sterling could struggle with the absence of any significant domestic data today. The softening of investor demand in the pound in the lead up to the election won’t help either.
GBP/CAD: Currently trading at 1.82494
Yesterday we saw the rate move within a range, with the pound losing ground before rebounding throughout the afternoon session. Governor Poloz signalled that another rate cut is off the cards and feels that a better-than-expected US growth pattern could be a risk that may affect Canada’s progression.
Today the focus will be on Canadian Wholesale figures, released at 1.30pm. A 0.2 per cent increase is predicted, which means we could see the loonie strengthen in today’s session.
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