Sterling was volatile last week after the Bank of England decided to hike interest rates by 25 basis points. After the widely expected hike, the pound initially rose but lost ground as Governor Carney struck a dovish tone during the press conference, highlighting the gradual path of future increases and heightened Brexit risks – he stated that the chances of a no-deal Brexit are ‘’uncomfortably high’’.
GBP/USD hit a two week low on Friday and has edged lower again this morning after the International Trade Secretary Liam Fox said the probability of a no-deal Brexit is 60:40. This is quite a turnaround after he stated negotiating a trade deal with the EU would be ‘’one of the easiest in human history’’ only 12 months ago.
Looking ahead, data releases are sparse ahead of GDP, industrial production and trade figures all due for release on Friday.
The Dollar Index hit a two-week high on Friday at 95.38 amid rising US-China trade tensions as both sides threatened to raise tariffs. Wednesday’s statement from the Federal Open Market Committee also likely provided support as they upgraded their language on economic activity to ‘strong’ from ‘solid’.
Some losses for the Dollar were seen into the weekend however as the index surrendered the 95 handle after a soft payrolls figure. The Index is flat this morning at just above 95.2.
This week brings us the JOLTS jobs data tomorrow, PPI and jobless claims on Thursday and CPI on Friday
The Euro was largely unresponsive to last week’s macro data including slightly stronger GDP and slightly softer CPI releases.
EUR/USD had been up above 1.17 early in the week but reached a five week low on Friday at $1.1560, weighed by a combination of yield differentials and risk aversion. EUR/USD has edged lower again this morning to a daily low of 1.1550.
It’s a quiet week with only Euro Zone investor confidence out this morning and the ECB’s economic bulletin on Thursday alongside German industrial production and trade figures.
The Japanese Yen fell last Tuesday in response to the Bank of Japan policy tweaks but finished the week on the front foot amid rising trade tensions and falling equities.
USD/JPY got down to a daily low of 111.10 on Friday and has picked up this morning little changed around 111.28.
Looking ahead, the BoJ summary of opinions is out tomorrow, machinery orders on Thursday and GDP on Friday.
The Swiss Franc saw some upside towards the end of last week, boosted by stronger-than-expected readings for retail sales, PMI and CPI.
EUR/CHFhit its lowest level in over five-weeks on Friday at just below the 1.15 level although losses may have been capped after SNB President Jordan said there is still room to lower rates if needed.
EU/CHF is just about holding above 1.15 this morning. Data releases are sparse this week with only unemployment figures on Thursday.
The Australian Dollar was at the mercy of US-China trade tensions last week, with AUS/USD falling to a two-week low on Friday after Trump threatened higher tariffs.
We saw a rebound on Friday however to above 0.74 as Australian retail sales surprised to the upside.
AUD/USD is flat this morning at around 0.7398 with investors now looking ahead to tomorrow’s RBA rate decision where rates are expected to remain on hold.
The Canadian Dollar saw a steady climb versus the Greenback last week, with USD/CAD reaching a seven-week low on Friday at 1.2967.
The Loony was supported by a variety of factors including stronger data (GDP and trade) and some mildly positive NAFTA headlines – a Canadian Official said the US, Canada and Mexico are very close on rules of origin. Looking ahead, we await IVEY PMI tomorrow, housing data on Wednesday and Thursday plus employment data on Friday.
NEW ZEALAND DOLLAR
The New Zealand Dollar softened last week as rising US-China trade tensions took their toll along with soft domestic wage data.
NZD/USD hit a two-week low on Friday at 0.6721 and has kicked off this week at around 0.6746 with investors now looking ahead to Wednesday’s RBNZ rate decision where the OCR is expected to remain on hold.
The Swedish Krone finished last week on the back foot having rallied on Monday after stronger-than-expected GDP data.
EUR/SEK hit an eight-session high on Friday at 10.3436 while USD/SEK reached its best level in two weeks. Ahead, industrial production data is out tomorrow followed by CPI on Friday.
EUR/NOK held in the 9.52-9.56 region for most of last week with little reaction seen in the Krone to a string of weaker-than-expected domestic macro releases including retail sales, manufacturing PMI and unemployment.
The pair has begun this week in the middle of this range around 9.54. Looking ahead, Friday CPI/PPI data will likely be the main focus for investors this week.
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