- USD tumbled yesterday as risk appetite returned
- BOC Governor Poloz played down the recent uptick in data
- BOE Governor Carney comments on the risk of a Brexit
The USD tumbled yesterday as commodity currencies pushed higher after a renewed appetite for risk. This risk appetite could be short lived as oil prices have declined following reports that the Kuwaiti gas workers have ended their three-day strike and they are to make every effort to immediately return production to its previous level, so we may see profit taking and commodity currencies may come under some pressure throughout today.
Bank of Canada governor Stephen Poloz played down the effect of some recent encouraging macro data and warned that the global economy retained the capacity for further disappointment and that the recent uptick could be temporary. He acknowledged that activity outside of the oil industry is gathering momentum but he also pointed out that there is still excess capacity in the economy. It's clear that interest rates will remain at emergency levels for some time with analysts now not expecting a hike until at least the end of next year.
In the UK, Governor Carney repeated that the BoE would not make any overall assessment of the economics of UK’s membership of the European Union. He did add however, that a vote to leave the EU might result in an extended period of uncertainty about the economic outlook, including about the prospects for export growth, and this uncertainty would be likely to push down on demand in the short run. He also said the bank rate could be moved closer to zero if needed although there is no appetite for negative rates. Sterling took these remarks in its stride and pushed close to a one month high against the USD.
Looking ahead, UK average earnings, jobless claimant count and unemployment rate at 9:30GMT and then ECB President Draghi's speech at 11:00GMT will be the focus this morning. Conditions in the Eurozone seem to be tentatively stabilizing so unless Draghi surprises the market with any fresh accommodative action, the Euro could remain well supported.
Today's Major Economic Releases
||UK: ILO unemployment rate, %
||UK: Jobless claimant count, k
||UK: Average weekly earnings, % 3m/y
||UK: Core average earnings, % 3m/y
||ECB President Draghi speaks
||US: Existing home sales, mn saar
Daily Currency Insight and Analysis with Denzil Rickerby
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