USD weakens ahead of busy week
The US dollar gave up some of its gains in the last couple of trading days. That allowed the GBPUSD rate to climb back to $1.2050 and the EURUSD rate to gain ¾ of a cent to this morning’s $1.0660. The start of the week is quiet for the USD but there is activity elsewhere. More of that is below. For the US markets, the testimony of Fed Chair Jerome Powell will be key and Friday’s employment report will paint a picture of the US economy in February.
Euro softer ahead of Eurozone GDP
The softer USD has flattered the Euro to some degree but Euro trade is muted ahead of this morning’s Eurozone retail sales data. However, the impact of that data may also be muted ahead of Wednesday’s release of Q4 economic growth data for the Eurozone. The consensus is for an annual growth figure of 1.9%. Any variation from that will affect the Euro’s value. Right now, the GBPEUR rate is up to €1.1320 but has been a tad higher overnight.
25 basis point hike expected from Australia overnight
When the Reserve bank of Australia meets in the small hours (from a UK perspective) of Tuesday morning, we all expect they will lift their base rate by 25 basis points to 3.6%. If they do, it’ll be the highest level since May 2012. The RBA is in the same boat as all central banks, treading the fine line between controlling inflation without killing any green shoots of recovery. Australian data has shown signs of a slowing pace of growth. So, although the rate hike looks to be guaranteed, the tone of the RBA’s statement may well be more dovish than previous ones. If so, even a 25 basis point hike may not stop AUD weakness.