Dear Subscriber, Please find below today's update which gives you an insight into the current market conditions, enabling you to keep informed and up to date on the latest currency movements. Headlines - Carney says no to more QE - Sterling rallies across the board.
- German CPI inflation down to 5-month low - ECB rate cut speculation harms Euro.
- GBP/USD up a cent - prospect of government shutdown spooks investors.
- GBP hits 3.5-yr high vs. CAD - RBA policy statement could weaken 'Aussie'.
Sterling The Pound put in a stellar performance on the final day of last week's trading session, strengthening against most of the majors as Bank of England Governor Mark Carney commented that further monetary stimulus is not needed due to the UK economy's renaissance over the past few months. "My personal view is, given the recovery has strengthened and broadened, I don't see a case for quantitative easing and I have not supported it", he said. Sterling was also supported by a slightly stronger-than-expected GfK Consumer Confidence Survey result of -10 and a virile Nationwide House Price print of 5.0%, which stoked concerns that another bubble could be forming in Britain.
Euro The Pound to Euro exchange rate advanced by around 0.4 cents on Friday as decent UK data bolstered support for Sterling and a soft German inflation print compromised demand for the single currency. The Euro responded well to a series of morning Eurozone ecostats showing that indexes of Economic Confidence, Industrial Confidence, and Services Confidences all exceeded analysts' expectations during September. However, the common currency plummeted during the afternoon as traders reacted to news that the headline German CPI inflation print came declined by one percentage point to a 5-month low of 1.4%. With inflation running at depressed levels it is entirely possible that the European Central Bank could embark on some form of monetary easing before the year is out. Political tensions in Italy added to the single currency's woes when markets reopened for the week and GBP/EUR struck a fresh 9-month high.
US Dollar The US Dollar ceded a cent to the Pound on Friday as investors showed about as much enthusiasm towards the 'Greenback' as a pescetarian who has been misserved gammon when ordering the salmon at an à la carte restaurant. Although it was reported that US Personal Income, Personal Spending and Personal Consumption Expenditure Core all improved slightly in August, the US Dollar remained constrained due to fears that parliamentary officials may not be able to clinch a deal to avoid a government shutdown in October. The 'Greenback' also suffered from a fairly understandable drop in US Consumer Confidence from 82.1 to 77.5 in September, as Americans grew slightly more cautious in response to speculation that the Federal Reserve was on the verge of reducing its $85 billion a month stimulus programme.
Canadian Dollar Sterling trounced its way to a fresh 3.5-year high against the Canadian Dollar on Friday, appreciating by just under a cent as BoE Governor Mark Carney pretty much ruled out the use of any further quantitative easing measures for the foreseeable future. The 'Loonie' was also subject to concerns that the potential US government shutdown in October could prove detrimental to the lucrative trade relationship between Canada and the US.
Australian Dollar Sterling surged higher by around 2.0 cents against the Australian Dollar on Friday as traders positioned themselves ahead of this Tuesday's Reserve Bank of Australia interest rate decision. Although markets have only priced in a 6% chance of a rate cut in October, recent literature has hinted that the RBA will reduce rates in the next few months. Consequently, there is a fairly good chance that the Australian Central Bank will strike a dovish tone in their latest forthcoming statement.
New Zealand Dollar GBP/NZD rallied by around 1.5 cents on Friday to a fortnightly high as Carney's hawkish BoE comments bolstered demand for the Pound. The 'Kiwi' Dollar was also subject to downward pressure as the political impasse in America threatens to dampen investors' appetite for risk.
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