Thursday’s session began with the US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) and US Dollar to Canadian Dollar (USD/CAD) exchange rates all trending higher ahead of US Advance Retail Sales data.
USD bulls waiting for today's US retail sales for the rescue #forex
— Ashraf Laidi (@alaidi) June 11, 2015
Earlier… The US Dollar to Pound Sterling (USD/GBP) exchange rate sank by around 0.50% on Wednesday morning, along with the US Dollar to Euro (USD/EUR) and US Dollar to Canadian Dollar (USD/CAD) exchange rates, after US President Barack Obama statements fuelled speculation that officials believe the currency is overvalued.
As Wednesday’s session went on, the USD/GBP exchange rate dropped by -0.77% while the USD/CAD exchange rate slipped by -1.03%.
Federal Reserve Rate Hike and US Dollar (USD) Exchange Rate Strength Brought into Question
Market analyst Omer Esiner commented: ‘There’s a sense that both monetary policy makers and lawmakers may be starting to become uncomfortable with the Dollar’s strength and that’s starting to cap some of the [Dollar’s] upside here.’
Although President Obama cleared the situation up, claiming never to have made the statements, investors are beginning to look forward to next week’s Federal Reserve announcement. The Federal Open Market Committee (FOMC) will announce their latest interest rate decision and could cause some massive market fluctuations.
Bank of America Merrill Lynch commented: ‘Indeed, the rates market sees a near-zero probability of a hike in June, despite Friday’s strong employment report. The July meeting is expected to be a non-event as well, with just 2.5bp of slope prices into the inter-meeting forward OIS curve. Unsurprisingly, the market is treating September as the first truly “live” meeting. Market implied offs of a September liftoff have increased somewhat overt the past few weeks as data have improved, but with 10bp currently prices in, the market remains unconvinced a September hike is likely.’
Earlier… The US Dollar to Pound Sterling (USD/GBP) exchange rate jumped in Tuesday’s European trading as the ‘Greenback’ recovered from rumours that President Barack Obama had suggested the currency was overvalued; meanwhile, the US Dollar to Euro (USD/EUR) and US Dollar to Canadian Dollar (USD/CAD) exchange rates remained in a narrow range.
The US Dollar (USD) exchange rate was offered some additional support when the US Wholesale Inventories ecostat came in at 0.4% in April, rather than the 0.2% expectation.
US Dollar (USD) Exchange Rate Recovers after Obama Comments
The US Dollar (USD) exchange rate dipped in Monday’s Wall Street trading as doubts surfaced regarding the US economic recovery. Rumours that US President Barack Obama had stated that he was concerned about the currency’s strength also drove the ‘Greenback’ lower.
The White House counteracted the speculation, saying: ‘The President did not state that the strong Dollar was a problem. He made a point that he has made previously a number of times; that global demand is too weak and that G7 countries need to use all policy instruments, including fiscal policy as well as structural reforms and monetary policy, to promote growth.’
Friday saw the US Dollar (USD) surge as investors digested the latest US Change in Non-Farm Payrolls report which showed the economy had created a massive 280K jobs in May.
Currency strategist Jens Nordvig commented: ‘A lot of people are quite sceptical that this payroll data we had on Friday is really a true reflection of how strong the economy is. They think the price action we had on Friday was a bit too optimistic.’
Euro (EUR) Exchange Rate Advances Despite Greek Uncertainty
Meanwhile, the Euro (EUR) exchange rate has been climbing against the Pound (GBP) as investors look toward a deal between Greece and its creditors. Furthermore, suggestions have surfaced that the nation could get a temporary deal until March 2016 to allow talks to continue.
One source stated: ‘After the summer we don’t have any big [debt] payments until March 2016, which in effect would be crunch time. That would be the time that the government would have to come to a big agreement.’
Additionally, Greece hacked down its 47-page reform proposal to only three sheets and submitted it to creditors for review on Tuesday.
Eurozone Gross Domestic Product (GDP) ecostats will be out later in Tuesday’s European session and could potentially cause some major Euro (EUR) exchange rate movement.
The Euro to US Dollar (EUR/USD) exchange rate is trending in the region of 1.1280 with -0.03% market movement.
The Euro to Pound Sterling (EUR/GBP) exchange rate is trending in the region of 0.7378 with +0.37% market movement.
Pound Sterling (GBP) Exchange Rate Remains Soft Despite Biggest Drop in Trade Deficit Since 2013
The Pound (GBP) exchange rate softened against the Euro (EUR), US Dollar (USD) and Canadian Dollar (CAD) on Tuesday despite favourable UK Trade Balance data. The UK’s trade deficit was cut down to the lowest level in more than a year in April, falling from -£3.093B to only -£1.202B.
Wednesday will be another influential day for Pound Sterling (GBP) trading with the release of the UK’s Industrial Production and Manufacturing Production figures. Additionally, the NIESR Gross Domestic Product (GDP) ecostat will emerge and could cause some significant Pound Sterling (GBP) exchange rate movement.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5300 with -0.29% market movement.
Canadian Dollar (CAD) Exchange Rate Sensitive to Crude Oil Prices and Iran Deal
The Canadian Dollar rose in Monday’s North American session when Canadian data printed favourably. The Canadian Housing Starts figure came in at 201.7K in May, rather than the 185.0K forecast. Meanwhile, Canadian Building Permits reached 11.6% in April on the month in stark contrast to the -5.0K prediction.
Oil prices rose on Tuesday as economists hoped for extra stimulus measures in China following weaker-than-forecast Chinese data. The Chinese Consumer Price Index (CPI) slipped from 1.5% to 1.2% in May on the year, rather than residing at 1.3% as expected.
Additionally, Chinese oil imports dropped by around 11% in the month of May on the year, the sharpest decline recorded since November 2013.
ANZ weighed in, saying: ‘The weak import numbers were a result of a significant increase in refinery maintenance in May… At the same time, the strong level of imports in recent months has put pressure on storage facilities at ports in China. This should be alleviated later this year as the construction of new storage facilities is completed.’
Additionally, a potential deal with Iran by the end of June could play a part in pressuring oil prices lower if Western sanctions are lifted and the nation is allowed to add more oil to the already over-supplied market.
The Canadian Dollar to US Dollar (CAD/USD) exchange rate is trending in the region of 0.8066 with +0.09% market movement.
The Canadian Dollar to Pound Sterling (CAD/GBP) exchange rate is trending in the region of 0.5276 +0.38% with market movement.
US Dollar (USD) Exchange Rate Forecast: USD/GBP, USD/EUR, USD/CAD
The US Dollar (USD) exchange rate is likely to experience some movement later in Tuesday’s Wall Street trading with the release of the US Wholesale Inventories stat. However, Thursday will be a major day for the US Dollar (USD) with US Advance Retail Sales data due to emerge.
The US Dollar to Canadian Dollar (USD/CAD) exchange rate is trending in the region of 1.2318. The US Dollar to Pound Sterling (USD/GBP) exchange rate is trending at 0.6509. The US Dollar to Euro (USD/EUR) exchange rate is trending in the region of 0.8866.