The US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR), US Dollar to Norwegian Krone (USD/NOK) and US Dollar to Australian Dollar (USD/AUD) exchange rates were all trending lower on Tuesday as the USD took a massive tumble against other major currency peers after Federal Reserve board member Lael Brainard stated that the US economic slowdown may not be a temporary glitch.
Pound Sterling (GBP), US Dollar (USD), BoE Interest Rates and US Jobless Claims in Focus
UPDATE: Thursday’s European trading began with the US Dollar (USD) remaining in a tight range against both the Pound (GBP) and Euro (EUR), while recovering losses against the Australian Dollar (AUD) and Norwegian Krone (NOK).
As Thursday’s session continued, the US Dollar to Pound Sterling (USD/GBP) exchange rate fell. The Bank of England (BoE) opted to keep rates on hold in June and investors will be looking toward the central bank’s meeting minutes for details or a possible policy maker divergence.
Additionally, US Initial Jobless Claims came in at 276K in the week through May 30th, rather than the 278K forecast. Continuing Claims reached only 2196K in the week through May 23rd, after economists had predicted 2207K.
UPDATE: Friday’s European session is likely to see the US Dollar exchange rate fluctuate massively with the release of the US Change in Non-Farm Payrolls. Meanwhile, the Bank of England’s inflation report will be out later in the session, and the situation with Greece will be ongoing throughout the day. Greece failed to make its IMF repayment on Friday, placing them one step closer to a Grexit.
Australian Retail Sales Flop, Greece Rejects Reform Proposals, BoE Interest Rate Decision Ahead, AUD, EUR, GBP Sensitive
Australian Retail Sales came in flat at 0.0% on the month in April, rather than the 0.3% forecast, while the Australian trade deficit expanded more than predictions had suggested. The Australian Trade Balance stat came in at -3888M in April after the previous month’s -1231M, economists had forecast a more favourable -2100M.
Additionally, Greek Prime Minister Alexis Tsipras rejected creditors’ reform proposal, leaving the Euro (EUR) extremely sensitive to any developments in Greece.
Meanwhile, the Bank of England’s (BoE) interest rate decision will be announced later in the day which is likely to have an influence on the GBP exchange rate.
Australian GDP Offers Australian Dollar (AUD) Exchange Rate Support, US ISM Non-Manufacturing Forecast to Cause US Dollar (USD) Fluctuations
UPDATE: Wednesday morning saw the USD/GBP, USD/NOK and USD/AUD exchange rates continue to trend lower ahead of the highly influential US ISM Non-Manufacturing Composite index later in the session. Additionally, Markit’s UK Services PMI will be released, and the European Central Bank (ECB) will announce its latest interest rate decision followed by a press conference with ECB President Mario Draghi.
Full #Draghi: – No QE exit discussion, no financial risk – Higher volatility? Get used to it! – No change of attitude vis-à-vis #Greece
— Maxime Sbaihi (@MxSba) June 3, 2015
Australia’s Gross Domestic Product (GDP) stat fell from a negatively revised 2.4% to 2.3% in the first quarter on the year, but failed to sink to 2.1% as forecast.
US Dollar (USD) Exchange Rate Slips Dramatically on Federal Reserve Statements
Fed’s Brainard stated: ‘It would be difficult… to dismiss the possibility of a more significant drag on the economy. There is value to watchful waiting while additional data help to clarify the economy’s underlying momentum.’
The US Dollar (USD) exchange rate has surged in popularity in recent weeks as US economic data has improved. However, Tuesday saw US Factory Orders slip by -0.4% in April, more than expected by economists.
Brainard continued: ‘The data are presenting a mixed picture… There may be reason not to ignore recent readings entirely. The underlying momentum of the recovery has proven relatively susceptible to successive headwinds. Data in hand pertaining to the second quarter do not suggest a significant bounceback.’
If a slowdown in US economic data does occur, investors are liable to push back interest rate expectations and the US Dollar (USD) exchange rate is likely to soften.
Euro (EUR) Exchange Rate Jumps as Greek Deal Looks Imminent
Meanwhile, the Euro (EUR) exchange rate rallied as investors speculated that a deal between Greece and its creditors would be made this week as finance heads sent Greece a proposal. However, there have been a few hitches that have cast doubt on that possibility, including the Greek Syriza government claiming that it hasn’t received any information regarding a possible deal.
Greek Prime Minister Alexis Tsipras stated: ‘The Greek government has not received an agreement plan from the institutions, nor has there been contact between the prime minister or some other official of a government with corresponding officials from the institutions.’
Furthermore, Tsipras didn’t wait long before sending his own 47-page proposal to creditors.
Our proposal continues to be the only realistic and constructive proposal. The discussions will continue. #Greece pic.twitter.com/VnxYbqxK9j
— Alexis Tsipras (@tsipras_eu) June 4, 2015
Tsipras said at a press conference: ‘We are not waiting for them to submit a proposal, Greece is submitting a plan – it is now clear that the decision on whether they want to adjust to realism… the decision rests with the political leadership of Europe.’
* German Fin Min Schaeuble says first impression of Greek list of reforms confirms view that talks won’t be over soon – RTRS
— Fabrizio Goria (@FGoria) June 3, 2015
So tonight’s meeting in Brussels will include @J_Dijsselbloem, @JunckerEU, @atsipras and representatives of ECB and IMF.
— Eleni Varvitsiotis (@Elbarbie) June 3, 2015
The Euro to US Dollar (EUR/USD) exchange rate has climbed by +1.78%, and is currently trending in the region of 1.1118.
Australian Dollar (AUD) Exchange Rate Climbs after RBA Keeps Rates on Hold
The Australian Dollar (AUD) was offered some support on Tuesday after the Reserve Bank of Australia (RBA) announced it was keeping interest rates on hold at 2.0% after making two cuts already this year.
The prospect of lower borrowing costs can severely weaken a currency; the Australian Dollar’s (AUD) close counterpart the New Zealand Dollar (NZD) is currently trending lower in the market as investors’ price in rate cuts next week.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is trending in the region of 0.7739 with market movement of +1.64%.
Norwegian Krone (NOK) Exchange Rate Recovers from Losses and Rises with Oil Prices
The Norwegian Krone (NOK) exchange rate jumped significantly against the US Dollar (USD) on Tuesday after registering its largest drop in two years versus the US Dollar (NOK/USD) on Monday. The fall in the Krone (NOK) was accredited to the decline in the NIMA Manufacturing PMI which softened from 50.5 to 46.6 in May. Additionally, Norwegian Loan Growth slipped on the year from 5.8% to 5.7% in April.
However, despite the data, the rebound in the Norwegian Krone (NOK) was spurred by a rise in oil prices. Crude oil values increased when the US Dollar (USD) sank and experts suggested that the Organisation of Petroleum Exporting Countries (OPEC) was likely to keep output levels on hold rather than increase them. An OPEC meeting in Vienna is likely to cause major Krone (NOK) fluctuations.
Head of oil research at Societe General, Michael Wittner, commented: ‘This Friday’s OPEC meeting should be a non-event. We expect Saudi Arabia and OPEC to stay the course and continue their policy of letting prices balance the market from the supply side.’
The US Dollar to Norwegian Krone (USD/NOK) exchange rate is trending in the region of 7.8604 with market movement of -1.28%.
Pound Sterling (GBP) Exchange Rate Forecast to Fluctuate on BoE Interest Rate Decision and Inflation Predictions
The Pound Sterling (GBP) exchange rate climbed on Tuesday after favourable UK construction data emerged. However, the main event for the Pound (GBP) exchange rate this week will be the Bank of England’s (BoE) interest rate decision on Thursday and the 12-month inflation forecast on Friday.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trending in the region of 1.5321 with market movement of +0.82%.
The US Dollar to Norwegian Krone (USD/NOK) exchange rate is trending in the region of 7.8620. The US Dollar to Australian Dollar (USD/AUD) exchange rate is trending at 1.2922. The US Dollar to Pound Sterling (USD/GBP) exchange rate is trending in the vicinity of 0.6527. The US Dollar to Euro (USD/EUR) exchange rate is trending in the region of 0.8995.
