Market News – 6 November 2017
STERLING
A soft week for the Pound with the UK currency on the back foot after the Bank of England’s latest policy announcement.
Despite a hawkish 7-2 vote to lift interest rates for the first time in a decade, the BoE removed the sentence about “increasing rates faster than expected,” signalled only “gradual easing” in the future and stressed the uncertainties about Brexit.
The dovishness of the statement and the press conference sparked a sell
off for the Pound across the board, though Friday’s services PMI reading which exceeded expectations capped losses.
For the week, the pound lost 0.4 percent versus the US Dollar, 0.1 percent versus the Yen and 0.4 percent versus the Euro.
EURO
It was a slightly less eventful week for the Euro following the ECB policy announcement last week. The shared currency saw little in the way of traction as data releases came in broadly softer than expected for the Eurozone.
Political tension also appeared to be on the rise in Spain after a judge jailed eight members of the Catalan government and issued European Arrest Warrants for the ousted Catalan leader Puigdemont and four of his allies who fled to Belgium.
US DOLLAR
The US Dollar was relatively directionless last week with the Dollar Index adding just 0.03%. The bulk of the focus was on the Federal Reserve who stood put on rates, with December looking like a more probable opportunity for the FOMC to adjust their funds target but stated that activity is rising at a solid rate despite the recent hurricanes.
Also of note was the GOP tax bill and news that President Trump has appointed Powell as Yellen’s successor. The speculation ahead of the latter led to some US Dollar pressure as he is considered one of the more dovish members on the candidate list.
JAPANESE YEN
The Yen fell against most of its G10 peers last week after the Bank of Japan
maintained its accommodative monetary policy, with a dovish dissenter, and trimmed it’s near term inflation forecast.
In terms of data releases, numbers came in mixed with retail sales rising for the 11th consecutive month, the jobless rate unchanged at 2.8 percent and manufacturing PMI falling to 52.8 in October.
SWISS FRANC
A quiet week for the Swiss Franc with few domestic impulses for traders to work with.
The KOF leading indicator rose to the strongest level in just over seven years, and consumer confidence improved marginally in October. However, SNB Vice Chairman Zurbruegg stated the central bank remains committed to low interest rates to combat the strong Franc.
AUSTRALIAN DOLLAR
The Australian Dollar was one of the weaker G10 currencies last week after retails sales missed forecasts for the third month.
Looking ahead, this week sees the RBA rate decision with the Bank expected to stand pat on rates, despite the Q3 CPI print leaving inflation below the bottom edge of the RBA’s 2-3 percent target band.
CANADIAN DOLLAR
The Canadian Dollar strengthened against most of the G10 currencies last week. The bulk of the gains came in the wake of rising oil prices on speculation that OPEC will extend supply curbs.
The Canadian employment report was relatively strong at 35.3k versus the 15.0k estimate.
NEW ZEALAND DOLLAR
The New Zealand Dollar saw a disappointing start to the week before finding support and being lent a helping hand by domestic jobs numbers.
Looking ahead, this week sees the RBNZ rate decision with the central bank expected to maintain rates.
SWEDISH KRONA
The Swedish Krona continued to weaken last week after the Riksbank’s announcement where officials left the door open to additional asset purchases. The board also extended its mandate to allow “a quick intervention on the foreign exchange market”.
In terms of data releases, Sweden’s manufacturing and service growth remained robust in October, but both eased since September.
NORWEGIAN KRONE
The Norwegian Krone weakened last week after retail sales decreased for the second straight month in September.
Rising oil prices seemingly had little impact, with both Brent and WTI at multi-year highs on speculation that OPEC will extend supply curbs.