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    European Session – Sterling under pressure on Brexit concerns, risk ahead of UK jobs data, BoE

    There was some risk aversion in the markets today and caution among investors ahead of the FOMC policy announcement on Wednesday.

    Sterling was one of the worst performing major currencies during the European session as it fell below the key $1.42 level against the dollar. Renewed Brexit concerns and risk ahead of tomorrow’s UK employment report and UK Budget, as well as the Bank of England meeting on Thursday, are all putting pressure on the pound. The latest Brexit poll showed that the “leave” campaign was in the lead.

    The euro fell early in the session to trade below the key $1.11 level versus the dollar but got a lift after some poor US data which helped prevent further euro weakness.

    US retail sales fell 0.1% in February, which reignited concerns about the economy’s growth prospects. While the headline number was less than the expected 0.2% decline, the bad news was in the downward revision to the January figure, as it was changed to show a 0.4% decline instead of the previously reported 0.2% increase.

    The dollar fell further against the yen after the US data to reach a low of 112.62. The greenback traded mostly below 113 yen today as the Japanese currency was buoyed by safe haven flows in addition to getting a lift following the Bank of Japan’s no change in monetary policy. Rates were left at minus 0.1% but in the statement the BoJ removed language to cut rates again if needed.

    The New Zealand dollar had a big tumble after the bi-weekly auction of dairy products showed a drop in global prices. The GDT Price Index fell 2.8% today, following the 1.4% rise on March 1. The kiwi dipped to 0.6589 against the US dollar after the data, the lowest level since March 1.

    In other commodity-linked currencies, the Canadian dollar was weaker as oil prices continued to slide today. US oil futures prices fell below $37 a barrel today to reach the lowest level in over two weeks at $36.04.

    The Australian dollar was back below 75 US cents today after the Reserve Bank of Australia minutes suggested that more easing was possible if inflation remained low.

    Gold traded lower today, hovering around $1230 due to the broadly stronger US dollar.

    Focus now shifts to the FOMC meeting which begins today and concludes tomorrow with a policy announcement. The Fed is not expected to hike rates at this meeting but the dot plots will be closely scrutinized.

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