Daily Market Commentary

Friday, 18 August 2017 - Market Commentary

Alex Hartley

United States Dollar

The US Dollar has had a topsy turvy 24 hours versus the Pound as investors decide on whether they are for the Greenback. Cable rose early yesterday as European markets picked apart Trumps latest faux pas as well as domestic UK data posting positive retail sales figures. The quantity bought increased 0.3%, which was better than the 0.2% forecast, due to strong sales in food stores. Come the afternoon, the US Dollar had pushed the Pound to a session low of 1.2856 in anticipation of the US unemployment claims. Despite the green print showing a decrease to 232k at 1:30 pm, lower than both the previous and expected figure, the US Dollar wavered. Political tensions in Washington saw Donald Trump’s disbanded business advisory councils spill into further scrutiny of the administration with rumors that Gary Cohn, the former Goldman Sachs Group president and top economic adviser to Trump, might resign. These rumors were squashed however a question mark does remain over key policy staffers and aides as Trump decried the removal of pro-slavery Civil War Confederacy monuments. The saga continues and GBP/USD keeps testing 1.2900 this morning. GBP/USD 1.2886 – 9:30 am.

As we head into the weekend, data remains minimal on both sides of the pond with only medium weight data from the US expected. US consumer sentiment and FOMC member Kaplan comments are both due from 3 pm this afternoon, but I would assume that we haven’t heard the last from Trump to also add volatility to the Greenback.

We expect a range today in the GBP/USD 1.2850 to 1.2960

Euro

The single currency has lost ground against both the US Dollar and Pound after the ECB minutes of its July meeting. Despite gains in the Euro being justified on the regions recent economic recovery, words such as ‘overshoot’ were thrown around to describe the recent advance. This saw EUR/USD dip to 1.1688 and GBP/EUR advance to 1.1017. A small recovery was seen in the Euro after the minutes were deciphered, but the gains have been hindered by further terror attacks in the city of Barcelona, Spain. The first attack saw 13 people killed and dozens injured with the second seeing Spanish police shooting dead five suspected terrorists in the town of Cambrils. Markets have taken a risk off approach to the news and the single currency has traded within very narrow ranges overnight. EUR/USD 1.1736 and GBP/EUR 1.0980 – 9:30 am.

Eurozone closes this week with no macroeconomic data. Early this morning low impact data from Germany and European current accounts were released however the data has been shadowed by the Barcelona headlines.

We expect a range today in the GBP/EUR rate of 1.0940 to 1.1020

Aussie and Kiwi Dollars

As markets close the week with a risk off approach, following the terror attacks in Spain and political unrest in the US, the Australian Dollar has fallen against the Pound. The pair has risen to 1.6336 after falling to 1.6196 for Thursday’s start. There is little heavyweight antipodean data next week, so data elsewhere will drive Aussie movement. GBP/AUD 1.6264 – 9:30am.

The kiwi has mimicked the Aussie in regards to the movement against the Pound. As there is little data to comment on from New Zealand, UK retail sales helped Pound gains yesterday morning. As traders turned risk averse late yesterday, this sentiment has continued overnight and in today. GBP/NZD 1.7608 – 9:30 am.

We expect a range today in the GBP/AUD rate of 1.6210 to 1.6460

We expect a range today in the GBP/NZD rate of 1.7510 to 1.7680

Data Releases

AUD: No data releases due for release

EUR: Final CPI y/y, ECB monetary policy meeting accounts

GBP: Retail sales m/m

NZD: No data releases due for release

USD: Unemployment claims, Philly FED manufacturing index, capacity utilization rate, industrial productions m/m, FOMC member Kaplan speaks

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