Politics Continues to Drive

Sterling picked up and the US and Canadian dollars were weaker yesterday. A quieter calendar leaves politics and headlines in focus.

Previous Day's Market Highlights

The pound traded higher yesterday as Services PMI surprised to the upside and Prime Minister May struck an optimistic tone on a Brexit transition deal. Sterling-euro regained ground above 1.12 while sterling-dollar recovered the 1.38 handle. The dollar was weaker in the afternoon despite mixed Services PMIs, and euro-dollar climbed back above 1.23. The single currency continued to digest Germany’s coalition formation and Italy’s hung parliament election results.
 
In addition to recent pressure on the US dollar, US protectionism and trade war concerns saw sterling-Canadian dollar break 1.80 for the first time since the referendum.  
 
As was widely expected after previous indications the RBA was in no rush to move rates higher, the RBA kept interest rates on hold at 1.5%. The Aussie had briefly weakened earlier on sub-forecast Retail Sales and Current Account figures.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1209 1.1453 1.1161 2.55%
GBP/USD 1.3824 1.4279 1.3711 3.98%
EUR/USD 1.2333 1.2556 1.2154 3.20%
GBP/AUD 1.7806 1.7999 1.7574 2.36%
GBP/NZD 1.9103 1.9456 1.8934 2.68%
GBP/CAD 1.7958 1.8057 1.7371 3.80%

Today's Market Highlights

It’s a quieter data day today, which may mean that politics and headlines, particularly regarding trade in the US or Brexit in the UK, will drive any major movements; other than that, currency movement may remain relatively limited.
 
First up on the calendar is a speech from the Fed’s Dudley, who is set to address the economic impact of last year’s hurricanes (12:30 GMT). This may see little dollar movement unless there are significant implications for monetary policy.
 
Mid-level releases this afternoon include the Global Dairy Trade Price Index for kiwi dollartraders and Canada’s Ivey PMI (15:00 GMT), gains in which could see support for the currencies. Concerns over a potential trade war may continue to weigh on the Canadian dollar.
 
MPC Member Haldane speaks this evening (18:15 GMT) at the Royal Society for the Encouragement of Arts, Manufacturers, and Commerce for the release of the Citizens’ Economic Council’s final report. RBA Governor Lowe speaks later, on “The Changing Nature of Investment”. The Fed’s Brainard will then discuss monetary policy and the economy.

Today's Economic Calendar

Time Currency Release Consensus Previous
12:30 USD Fed's Dudley Speaks
NZD Global Dairy Trade Price Index -0.5%
15:00 USD Factory Orders MoM (Jan) -1.3% 1.7%
15:00 CAD Ivey Purchasing Mangers' Index s.a. (Feb) 56.3 55.2
18:15 GBP MPC Member Haldane Speaks
21:35 AUD RBA Governor Lowe Speaks
22:30 USD Fed's Brainard Speaks
00:30 AUD GDP QoQ (Q4) 0.5% 0.6%

Caxton