Previous Day's Market Highlights
Sterling rallied sharply yesterday on reports that both the UK and Germany were willing to put aside key demands in order to facilitate a deal. This saw the pound up around 1% against the dollar and over 0.5% against the euro. It later pared gains when a spokesman from the German government said that nothing had changed. While cable eyed the upper end of the 1.29-1.30 band, it failed to break the psychological barrier of 1.30. Sterling-loonie tested 1.71 for the first time in a month.
Earlier in the day, UK Services PMI surprised to the upside, rising from 53.5 to 54.5. The Manufacturing and Services indices had fallen more than expected earlier in the week.
As had been widely expected, the Bank of Canada kept interest rates on hold at 1.5%. While it maintained market expectations of a rate hike next month, the statement did indicate that NAFTA talks remain a potential risk to the inflation outlook. Despite some movement, the loonie was overall little changed around the decision.
Today's Market Highlights
It’s a quiet calendar day for the pound, which will keep an eye out for any additional Brexit headlines. As we saw yesterday, sterling remains vulnerable to the tone of negotiations and further volatility should be expected ahead of a deal. ADP Employment Change is forecast to slow but remain solid (13:30) ahead of tomorrow’s jobs report. A softer ISM Non-Manufacturing PMI could weaken the dollar (15:00). Overall, trade headlines and market sentiment will remain key drivers of the greenback.
Following on from the Bank of Canada’s decision to keep rates on hold yesterday, Senior Deputy Carolyn Wilkins will speak on the economic outlook this evening (19:30). Later this evening, RBNZ Governor Orr will speak on “Geopolitics, New Zealand, and the Winds of Change”.