GBP Makes Gains Before The FOMC Announcement
While the Pound initially advanced yesterday as the UK’s GDP report confirmed that the nation’s economy enjoyed its strongest year of growth since 2007, the British currency went on to pare gains against the US Dollar and Euro. The ‘Cable’ remained close to a 2 ½ year high following a mixed bag of US reports and UK house price data but today’s Federal Open Market Committee policy announcement could be a game changer for the pairing.
Yesterday the ‘Buck’ weakened against several of its major peers as US durable goods orders unexpectedly plummeted in December, dropping 4.3 per cent rather than rising 0.6 per cent as forecast. However, US Dollar declines were tempered as separate data revealed a surprising improvement in domestic consumer confidence. Today’s US mortgage applications data will be of interest but the upcoming FOMC statement will be the major market mover.
Although the Euro was trading in a fairly narrow range against its major rivals on Tuesday, the common currency experienced mild fluctuations in response to an unforeseen drop in the German import price index. This morning the Euro rallied as a German consumer confidence survey showed a stronger-than-forecast rise in sentiment.
During Australasian trading the ‘Aussie’ posted widespread gains as the Westpac Leading Index advanced by 0.1 per cent in December, wiping out November’s 0.1 per cent decline. Given that yesterday’s Australian business conditions/business confidence reports showed improvement, this data adds to the moderately improving picture of Australia’s economic outlook and lowers the odds of the Reserve Bank of Australia cutting interest rates. The ‘Aussie’ also benefited from action taken in Turkey to halt the Lira’s decline.
New Zealand Dollar
After the Turkish central bank increased rates in an attempt to temper market volatility and bring an end to the Lira’s bearish trend, emerging-market and commodity-driven currencies advanced. The ‘Kiwi’ rallied against several of its peers overnight and received additional support from the expectation that the Reserve Bank of New Zealand will drop hints regarding raising interest rates when it meets later today.
Emerging-market currency concerns may have ebbed on Tuesday but the ‘Loonie’ proved unable to stage a notable recovery against its rivals. The Canadian Dollar continued to trade below 90 US cents and was struggling against a buoyant Pound as investors looked to Friday’s all-important Canadian growth report.
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Pete Southern is an active trader, chartist and writer for market blogs. He is currently technical analysis contributor and admin at this here blog.
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