- US Dollar stronger on oil and political tension
- Canadian employment data should boost Canadian Dollar
By David Johnson
The Bank of England (BoE) left the UK base rate on hold as was widely expected. Governor Mark Carney said UK interest rates are likely to rise slowly over the next year, but warned that, if the economy slows, that policy will be under review. He also commented that inflation was expected to ease lower in the year ahead. None of that is news, really, but the Pound dropped a cent on the day.
US Dollar ready to rise?
Across the Pond, US inflation rose more slowly than forecast in April. The annual headline rate was still 2.5% and that’s a healthy pace; at the upper end of the Federal Reserve’s target rate. Add that to the international tension caused by the Israel versus Iran military action and the new sanctions imposed by the US on Iranian businesses and key officials, and the scene is set for US Dollar strength. The GBPUSD rate is down to $1.35 and the EURUSD rate is hunkered down below $1.19.
Oil prices soar
The tension in the Middle East has pushed oil prices up to their highest since mid-2014. Higher energy costs tend to weaken the US Dollar, so goodness only knows how strong the Dollar would be without that trailing anchor.
Canadian trade agreement optimism
Canadian Foreign Minister, Chrystia Freeland, expressed optimism over the North American Free Trade Agreement (NAFTA) talks yesterday. Sadly we have heard a lot of optimistic rhetoric surrounding these negotiations, so the markets didn’t immediately buy Canadian Dollars. However, today’s release of Canadian employment data is forecast to be positive, so the CAD could make some gains on the day. Against the Pound, it starts at an already surly C$1.7250, so it is off to a good start.
Traders turn to politics and central bank rhetoric today
Other than these few morsels, the data diary is as empty as Donald Trump’s memory. So, traders will be looking to politicians and central bankers for clues. Gawd bless ‘em…. every one. And then it is a weekend. I hope yours is a belter! If you’ve got some time on your hands and a quarter of a million quid to squander, Rolls Royce has joined the luxury SUV market with the Cullinan. Sadly it has a face only its mother would love, but it’ll sell anyway. That diaphanously clad lady on the bonnet makes all the difference.