On Tuesday the Pound declined across the board as investors fixated on some rather mixed commentary from several Bank of England (BoE) officials. While Kristin Forbes maintained a hawkish attitude towards the timeline for raising interest rates, the BoE’s chief economist Andy Haldane once again proffered the opinion that borrowing costs are as likely to fall as to rise. BoE Governor Mark Carney was also very non-committal, causing some investors to push their expectations for the first adjustment back to 2017. Concerns that today’s UK budget statement will outline growth-sapping austerity measures also had a negative impact on demand for the Pound.
Hopes for a December interest rate hike from the Federal Reserve were fuelled on Tuesday as US growth data for the third quarter printed well. Positive domestic data, coupled with the risk-off environment inspired by tension between Russia and Turkey, kept the ‘Greenback’ trending strongly. If today’s Durable Goods Orders report shows the forecast increase the US Dollar could extend gains against peers like the Pound.
The Euro recovered ground against Sterling over the course of Tuesday’s European session as the German IFO Business Climate, Current Assessment and Expectations indexes all printed more strongly than expected. The common currency is trending in a fairly narrow range today but could experience fluctuations tomorrow as the German GfK Consumer Confidence index is published. The gauge is expected to have fallen from 9.4 to 9.2.
After the Reserve Bank of Australia (RBA) displayed a very laid back attitude to fiscal policy the ‘Aussie’ stormed higher against the majority of its most-traded currency counterparts. The South Pacific asset gained on the Pound and achieved a month-high against the US Dollar. Overnight Australian data showed a sharper-than-forecast decline in Construction Work Done in the third quarter and an easing in Skilled Vacancies in October. The reports had little impact on the Australian Dollar however, with the GBP/AUD exchange rate holding in the region of 2.0783.
New Zealand Dollar
With New Zealand’s potentially influential trade balance data looming, the ‘Kiwi’ could be in line to experience some volatility later today. As is stands, the New Zealand Dollar is down ever so slightly on the day’s opening levels against the US Dollar and Pound. Should today’s US Durable Goods Orders report bolster Fed rate hike expectations, the New Zealand Dollar could come under pressure.
After Turkey shot down a Russian plane bets that oil production would be compromised spiked and the price of ‘black gold’ climbed accordingly. The Canadian Dollar followed its key commodity higher and could extend gains if tensions escalate.