ECB cut rates, Saudi oil attack and Sterling appreciation


The Dollar Index is little changed this morning at around 98.2 having topped out at a one-week high on Thursday at 99.1. The Dollar was pulled lower by weaker than expected US retail sales data released on Friday, plus the post-ECB rebound we saw in the Euro. Investors are now looking ahead to Wednesday’s FOMC decision where economists expect another twenty-five basis point cut after Federal Reserve Chairman Jerome Powell acknowledged that economic headwinds are intensifying.


The pound rose last week with GBP/USD touching a daily high of 1.2506 on Friday which marked its best level since July 25th, although is currently half a cent lower this morning. Sterling benefited from both stronger than expected domestic data and a perceived reduced threat of a no-deal Brexit.

Investors will be bracing for more volatility this week with the Bank of England MPC decision on Thursday – rates are seen to remain hold via a 9-0 vote. We also await CPI on Wednesday and retail sales on Thursday.


The Euro was the busiest of the G10 currencies last week with most of the action taking place on Thursday. The single currency fell initially after the ECB unveiled their policy package which included the resumption of asset purchases (which have no end date unlike previous rounds) but rallied thereafter as President Mario Draghi stressed the importance of fiscal policy.

EUR/USD bottomed out at 1.0928 on Thursday before rebounding to 1.1070 this morning.

Looking ahead, German ZEW figures are out tomorrow followed by Euro Zone CPI on Wednesday and consumer confidence on Friday.


The Japanese Yen has begun the week with a modest bid tone as risk sentiment has been knocked by the Saudi Arabia oil refinery attack over the weekend. USD/JPY touched a six-week high on Friday at 108.27 as demand for the perceived safe-haven currency was limited by gains on Wall Street on positive trade developments.

This week we await the Bank of Japan on Thursday after source suggested last week that the waning global recovery may nudge policymakers closer to easing.


The Swiss Franc has begun the trading week with a modest bid, benefiting from the downturn in risk sentiment following the Saudi refinery attack. EUR/CHF is trading just below the 1.10 level with investors now looking ahead to Thursday’s SNB policy meeting.


The Australian Dollar is a touch lower this morning with weaker-than-expected Chinese data offsetting any benefit from the surge in oil prices. The Antipodeans have benefited recently from what appears to be an improvement in US-China trade relations with AUD/USD topping out at a six-week high on Thursday at 0.6895. The pair is down at 0.6876 this morning.

Looking ahead, the RBA meeting minutes are out tomorrow followed by the jobs report on Thursday.


The New Zealand Dollar has inched higher versus the US Dollar this morning although did touch a fresh one-week low overnight at 0.6369 before finding support. The attack on the Saudi oil refinery over the weekend and subsequent surge on oil prices have provided some support to the Kiwi Dollar.

Domestically, we await GDP data due for release on Wednesday.


USD/CAD flirted with 1.33 on Friday and nearly got down below 1.32 overnight before settling mid-range.

Looking ahead, inflation data is due on Wednesday followed by retail sales on Friday.


EUR/SEK is little changed this morning having been contained within the 10.6-10.7 range for the last three trading sessions. Friday’s GDP data was mixed and therefore prompted minimal reaction.

Unemployment figures are the only notable release this week and are due out tomorrow.


The Norwegian Krone has surged to the top of the G10 pile this morning as the main beneficiary from the surge in oil prices. EUR/NOK dropped below the 9.9 level overnight before finding support with investors now looking ahead to the Norges Bank policy decision on Thursday where economists expect a twenty-five basis point hike.

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