As USD Firms we see BoE Inflation Report Hearings in focus today

The USD was steady yesterday, inching higher against the GBP and the EUR. The BoE's Inflation Report Hearings are in focus today.

Previous Day's Market Highlights

Euro-dollar was little changed yesterday, trading either side of 1.16 amidst a light data calendar and bank holidays in the US and Canada. Overall, the dollar firmed slightly across the board; sterling-dollar fell below 1.29 and inched lower throughout the session.   
 
Elsewhere, the Canadian dollar remained vulnerable to uncertainty around NAFTA renegotiations. The Argentine peso fell on the announcement of new austerity measures.
 
Overnight, the RBA kept interest rates on hold at 1.5%, as had been widely expected given that the RBA downgraded its inflation forecasts in its quarterly monetary policy statement and ahead of an expected slowdown in Q2 GDP. However, the RBA was still upbeat in its statement, likely striking a less dovish tone than some traders had expected, which helped the Aussie strengthen overnight. Sterling-Aussie temporarily dropped back below 1.78.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1094 1.1241 1.0991 2.22%
GBP/USD 1.2845 1.3044 1.2666 2.90%
EUR/USD 1.1578 1.1734 1.1301 3.69%
GBP/AUD 1.7829 1.8055 1.7284 4.27%
GBP/NZD 1.9517 1.9619 1.9077 2.76%
GBP/CAD 1.6842 1.6987 1.6596 2.30%

Today's Market Highlights

The UK’s Construction PMI (09:30 BST) could pose some downside risk for the pound with a dip projected, but the release typically has the least significant market impact of the three PMI figures. More notable for the pound may be this afternoon’s Inflation Report Hearings (13:15), as the House of Commons returns from its summer recess.
 
With the BoE unlikely to shift from its expectation of gradual and minimal future rate hikes, the hearings may pose an additional downside risk. Carney may face questions on the risks of a no-deal Brexit for monetary policy and on recent reports that he may consider staying on as governor past next June.
 
In the afternoon, a dip in the US’s ISM Manufacturing PMI could weigh on the dollar. Overnight, Australia releases Q2 GDP. Slower economic growth could renew Aussie weakness.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP Markit Construction PMI (Aug) 54.9 55.8
10:30am AUD RBA Governor Lowe Speaks
1:15pm GBP Inflation Report Hearings
2:30pm CAD Markit Manufacturing PMI (Aug) 57.1 56.9
3:00pm USD ISM Manufacturing PMI (Aug) 57.7 58.1
3:00pm NZD Global Dairy Trade Price Index -3.6%
3:30pm USD Fed's Evans Speaks
2:30am AUD GDP QoQ (Q2) 0.9% 1.0%
2:30am AUD GDP YoY (Q2) 2.8% 3.1%

Caxton