Morning Report 28.04.2015
Nicholas Ebisch, FX Analyst
Yesterday’s quieter calendar provided room for speculators to trade in the way that they saw fit. The pound gained against the euro, dollar, and several other currencies during the trading session yesterday, as traders are still wary of the risks facing the euro and dollar. The pound has been unusually stable despite the pressure of next week’s general election outcome being far from certain. Although there is still uncertainty about which way the election will go, the pound is holding up, and there does not seem to be positioning for a prolonged slump following Election Day next Thursday. Today’s calendar includes Preliminary GDP q/q from the UK, followed this afternoon by the Bank of Canada’s governor Poloz speaking in Ottawa, and finally ending with US consumer confidence data.
GBP/EUR: Currently trading at 1.3949
Yesterday, Greece announced that Deputy Foreign Minister Tsakalotos will be handling day-to-day negotiations with Greece’s creditors, while Varoufakis will remain in charge of political negotiations. The pound nevertheless maintained its strength against the euro.
This morning, the UK released its q/q preliminary GDP, which came in slightly worse than forecast at 0.3%. With no major data expected from the eurozone today, attention will be on the continuing negotiations for a Greek deal before its upcoming repayments.
GBP/USD: Currently trading at 1.5190
The pound maintained its strength against the dollar yesterday, gaining about 0.86% against the dollar in the afternoon session. The rate reached the 1.52 mark, where it continued to trade into this morning’s session.
The results of the UK’s preliminary GDP q/q came in slightly worse than expected, leading the rate to drop below 1.52 for the first time this morning. Data to be released this afternoon include the results of the US’s CB Consumer Confidence index, forecast to show a slight increase over the previous month. Indications of an improvement in the US outlook may see a slight strengthening of the dollar as markets look ahead to Wednesday’s FOMC meeting.
EUR/USD: Currently trading at 1.0884
After the announcement that Greece would be putting Deputy Foreign Minister Tsakalotos in charge of some of the negotiations with Greece’s creditors, the euro jumped nearly 0.7% against the dollar as the Athens Stock Exchange index rallied in response to the news. The dollar has since regained some of the ground it lost yesterday.
This afternoon’s release of US consumer confidence data may see the dollar regain some of the ground that it lost during yesterday’s sessions. Markets will be waiting to see whether tomorrow’s FOMC statement reveals clues about the date of a US rate increase, as well as whether the change in Greece’s negotiating team will lead to a deal between Greece and its creditors.
GBP/AUD: Currently trading at 1.9241
The rate remained between 1.934 and 1.943 yesterday, barring a brief half-cent drop following strong US PMI data, which indicated a sustained improvement in U.S. service sector output. This drop was short lived as we saw the rate push back up to 1.94. RBA Governor Stevens decided not to comment on monetary policy last night, ahead of the board meeting next week. However, his words appeared to weaken the Aussie slightly, with the rate returning to nearer the 1.93 mark.
With no new data expected from Australia, fluctuations in the rate may come from adjustments to today’s weak UK GDP data and last night’s speech by RBA Governor Stevens.
GBP/NZD: Currently trading at 1.9840
With no major data out of New Zealand yesterday, at the start of this morning’s session, Sterling gained back some of the ground it had lost against the kiwi in earlier sessions.
Weaker than expected UK prelim GDP data has seen Sterling weaken slightly against the kiwi. As the markets adjust to the data release, focus will be on tonight’s announcement of New Zealand’s trade balance, the first data release this week from New Zealand. Its trade balance is forecast to increase to 312M from 50M last month, and a strong showing from exports data could see the kiwi strengthen.
GBP/CAD: Currently trading at 1.8466
With a quiet day on the calendar yesterday, some Sterling gains were seen in the afternoon. This was unexpected and can be attributed to poor services PMI data from the US. This resulted in investors unwinding their USD positions and looking for more profitable positions ahead of a crunch meeting from the Fed on Wednesday.
Today, attention will be on the effects of prelim q/q GDP for the UK economy, which came in below expectations and may see some Sterling weakness in the morning session. The afternoon session will focus on BOC Governor Poloz’s speech (13:45). With the recent pickup in oil prices, this address may include some positive sentiment about the outlook for the Canadian economy, which could lead to some CAD gains in the afternoon.
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