Data light, can GBP sit tight?
There were no major domestic developments yesterday for the Pound, allowing the Dollar and Euro moves to pave its way. The UK currency was unable to make any significant headway against the Dollar with selling interest around 1.3050. As a result, wider US gains pushed GBPUSD to below the 1.3000 level for the first time in two weeks with daily lows seen near the 1.2950 mark. The Pound also weakened against the Euro to fresh 10-month lows around 1.1013. There was some Sterling strength during the evening session which moved GBPEUR back to 1.1049 as the Euro also lost ground.
Domestic influences are liable to be limited on Wednesday ahead of industrial production and trade data due for release on Thursday.
There is nothing expected data-wise in the UK calendar today.
The Greenback, in terms of the US Dollar Index, deflated from daily highs yesterday, yet still manages to trade with slight gains around the 93.50 area.
The index clinched fresh tops in the vicinity of 93.80 on Tuesday following auspicious results from US Job Openings and Labor Turnover Survey (JOLTS) reaching a record high at more than 6.1 million for the month of June.
The results sparked a sharp up move in the Buck along with the usual speculations of a potential move from the Federal Reserve (FED) at some point in the next months. In fact, the idea that a strong US labour market will eventually push wages higher and cause inflation to move closer to the Fed’s target has been sustaining the upward move as of late.
However, the probability of a rate hike at the December meeting has eased to 42.5% from just below 50% seen last month, according to CME Group’s FedWatch tool, showing that skepticism still persists among investors.
On the US data front, weekly mortgage applications, advanced Q2’s non-farm productivity, and unit labour costs are due later in the NA session ahead of the EIA’s report on US crude supplies.
The Euro saw German exports and imports for June were weaker than expected yesterday, dampening Euro sentiment.
Dollar strength yesterday also caused a stir for the Euro as EURUSD closed bearish, dipping below the 1.1800 level with losses extending to below Friday’s lows. After finding support below 1.1720, the Euro failed to regain much ground as it closed at 1.1753.
With a quiet week for the Euro continuing still, the currency’s fate will remain in the hands of political outlook and market sentiment.
The Reserve Bank of New Zealand (RBNZ) is going to meet today to announce their decision on interest rates, publish Monetary Policy Statement, and to comment on the current economic situation.
The current interest rate of 1.75% is not forecast to change, despite the sell-off in the currency over the last 48 hours, and is expected to remain the same through year-end. Governor Wheeler holds his usual press conference after the announcement.
Data To Watch:
12:30pm USD Unit Labor Costs (Q2)
12:30pm Nonfarm Productivity (Q2)
9:00pm NZD RBNZ Rate Statement, RBNZ Interest Rate Decision, Monetary Policy Statement
10:00pm RBNZ Press Conference
10:45pm NZD Electronic Card Retail Sales (MoM) (YoY) (Jul)
11:01pm GBP RICS Housing Price Balance (Jul)