GBP: Sterling pops higher
EUR: Not much of a footing
USD: Fed should allow for some dollar strength
Sterling ended yesterday sharply stronger without too much reason. There is very little liquidity in markets at the moment and so moves can be outsized and we would not be surprised if the slight improvement in Covid-19 case numbers underpins some of the run higher for the pound.
With a Bank of England meeting next week, it does look like the pound could continue higher should markets get behind the UK’s Covid-19 plans and view the improvement as sustainable.
As expected, yesterday was an incredibly quiet day for EURUSD and will likely be so again until the Fed decision at 7pm this evening. We expect the meeting to be slightly USD positive and with the single currency unable to find much of a footing at the moment, it would make sense for EURUSD to trade lower this evening.
The wider risk remains however that the Fed lean on the rise in delta variant cases in the US to advocate for a delay to any reduction in stimulus.
As noted above, the Federal Reserve meeting this evening has been slated as the most important factor for currency markets this week although it is a very quiet week.
News in China has actually been the driver of dollar markets with a crackdown by the Chinese government on certain companies has upset risk appetite and sent local shares lower. A decent earnings picture from the States has also not been picked up by investors suggesting optimists are either tired, on the beach or are not comfortable with the overall macro environment.
The Fed meeting is at 7pm tonight and may offer USD strength although are fears around the delta variant may postpone any hawkishness until August.
AUD has strengthened a little overnight following a slightly better inflation number than had been forecast. The recent news out of China will be enough to keep the AUD and NZD however amid the weakness in global risk.
Today’s Interbank Rates at 08:14 against sterling. Movement vs yesterday.
|US dollar||$1.388 ↑|
|Australian dollar||$1.889 ↑|
|South African rand||R20.56 ↑|
|Japanese yen||¥152.5 ↑|
Have a great day.