19/01 – Time to act big

GBP: Stuck in a range for now

EUR: Italian PM wins first confidence vote

USD: Yellen comments help weaken USD

Sterling

Yesterday was as dull as ditch water with US liquidity on the side lines for Martin Luther King Day. That should return today and with it a broad trend of risk appetite. Yesterday’s movements in stock markets were broadly positive and falling yields on US debt should allow for currencies, including sterling, to push onwards.

A large risk to the sterling price remains the constant issues seen at ports and the border given new trade rules between the UK and EU. Delays are commonplace and confusion almost a given. If you or your business have experienced this, please get in touch to tell us how it affected you.

Sterling’s week really begins tomorrow with the release of inflation figures at 7am.

Euro

The Italian PM won the first of two confidence votes in his government yesterday, easing some of the concern around an early election. The final vote will take place today and a win once again should be enough to end the recent weakness in the euro as long as coalition partners don’t also push for an election. The vote takes place at 7pm.

A loss means the PM must resign and political risk will stalk the euro once more.

US dollar

Welcome to the last full day of the Trump Presidency. Tomorrow at 5pm GMT, Joe Biden will become the 46th President of the United States and markets are once again trading on the belief that his administration’s policies to stimulate the US economy will cause a sell-off in the US dollar. Comments from his incoming Treasury Secretary that the US needs to ‘act big’ to engender a recovery with rates this low suggest that we are nowhere close to the end of verbal interventions to promote a stimulative move in markets.

Yellen’s testimony begins at 3pm and will be the most important thing in markets today given her remit over everything from spending to currency.

Elsewhere

Commodity currencies are moving higher once again this morning as the global recovery trade falls back into focus. We continue to remain uncertain over some gains however and will be watching the AUD in particular for weakness in the coming sessions.

Have a great day.

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Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.