Pillole giornaliere

Due to the Thanksgiving Day holiday, the currency market analysis will not be available tomorrow, November 26, 2015. Normal service will resume on Friday, November 27, 2015. Thank you for your understanding.

The Pound fell across the board yesterday after dovish comments coming from BOE Governor Mark Carney ahead of today’s UK fiscal policy update at 12:30 which will be another important event for GBP. The Pound is just 0.4% above a 7-month low around the $1.50-1.49 price range against the US dollar.

Whilst still at its strongest in 8 months on a trade-weighted basis the US dollar lost ground to the safe haven Yen and Swiss franc following reports of Turkey shooting down a Russian warplane which heightened geopolitical instability.

GBP

Dovish talk from Bank of England Governor Mark Carney and downbeat data on UK consumers yesterday has pulled the Pound back to its lowest in weeks against the dollar. Mark Carney said interest rates would stay at record lows for ‘some time,’ reinforcing expectations that lift-off could be a year away. At 12:30 today UK Chancellor George Osborne will present a Government Spending Review which provides an update to investors on how much fiscal austerity will negatively impact the UK economy.

EUR

Germany’s influential Ifo survey unexpectedly improved to 109 in November, the highest in nearly 1½ years, from 108.2. Better news on Europe’s largest economy helped the Euro stabilize above seven-month lows against the dollar. But despite the improvement, the survey is unlikely to dissuade the ECB from increasing stimulus next week. This bearish sentiment leaves the Euro prone to dropping on profit-taking after and rally higher.

AUD

Collapsing commodities weighed on both the Aussie and kiwi dollars yesterday. The Aussie had its fall checked by upbeat remarks from the head of Australia’s Reserve Bank, Glenn Stevens, who anticipated growth to pick up thanks to increased hiring of late. The RBA is expected to keep its cash rate unchanged at 2.0% in its next decision on Dec 01.

USD

US growth was revised up last quarter but the US dollar hardly reacted to the news. The world’s biggest economy grew at an annual rate of 2.1% during the third quarter, above the first estimate of 1.5%. Heightened geopolitical uncertainty should help lend safe haven support to the dollar during the Thanksgiving holiday. The long-weekend kicks off Thursday and low liquidity could cause some bigger-than-usual FX moves if there are any impactful geo-political developments in Europe.