Halifax house prices recorded a 0.4% increase in January, the year-on-year increase rose 0.1% to 4.1%, but the data had little impact on the Pound. The UK government’s decision to allow partial Huawei access to the 5G network could undermine potential for a US-UK trade deal, adding concerns over UK trade developments. French officials stated that they aim to shift Euro clearing from London to the Eurozone. With a more defensive risk tone, the Pound lost ground as it dipped to 3-month lows just below 1.2900 against the Dollar and failed to make ground on the vulnerable Euro with a close around 0.8490.
CFTC data recorded a small decline in net long Sterling positions, but the overall positioning will limit scope for currency gains. Strong gains for Sinn Fein in the Irish General Election could also cause fresh complications over EU negotiations with the UK. Overall, Sterling initially corrected slightly on Monday, but then dipped again to just below 1.2900 against the Dollar.
Positive results in US fundamentals as of late in combination with safe-haven demand following the outbreak of the Wuhan coronavirus and the potential impact on global growth have been sustaining rally in the buck. In turn, this has lifted the Dollar to new yearly highs despite yields of the key US 10-year note dropped to the sub-1.60% area. In the meantime, investors continue to digest Friday’s solid report from US Non-farm Payrolls for the month of January (225K).
There will be no data releases in the US docket on Monday, although several Federal Reserve (Fed) speakers should keep the greenback in centre stage later: FOMC’s M.Bowman will speak on Community Banks, San Francisco speaks in Dublin and Philly Fed P.Harker will discuss Economic Outlook.
The Euro will be looking to start the week on a positive note after dropping to yearly lows at the 1.0943 figure. The decline in the pair appears to have met some contention and is now attempting to recover some much needed lost ground.
Concerns surrounding the Chinese coronavirus continue to dictate the sentiment in the global markets, while there is still no progress regarding the potential development of a treatment to counteract the fast-spreading virus.
On the docket today, Italian Industrial Production figures are due for release followed by the Sentix index, which gauges the investor’s confidence in the euro area for the month of February. As of writing, the Euro trades just above the 1.0950 level against the Dollar.
Data to watch
13:15 - USD - FOMC Member Bowman Speaks
Posted in Daily Market News on Feb 10 2020