In global foreign exchange market news, GBP/USD is currently trading at about 1.2190, GBP/EUR is trading into the mid 1.1500’s, with the Sterling both lower against the US dollar and the Euro over the course of the Asian session overnight as Euro walks in continuing to take the Sterling lower.
Comments from Theresa May on yesterday on a Sunday morning political show suggesting that her government would prioritize immigration reform over access to the single market. This isn’t anything new, but certainly with 11- weeks to go until the invocation of “Article 50” is due to take place and certainly the lack of a plan, Theresa May wouldn’t be drawn on anything which revolves about Brexit, as her talk was more about domestic agenda which she was more comfortable talking about. The lack of detail, the lack of planning, saw market taking the Sterling lower as a result.
That’s the lowest level in GBP/USD since early October and GBP/EUR still has somewhere to go to reach those kind of lows, but obviously it is into the mid 1.1500’s – not a great start to the week.
Elsewhere, the market is still in a kind of “wait and see mood.” We have a press conference from Donald Trump on Wednesday, his first press conference since winning the vote in early November. We’ll wait and see just exactly what the Senate also does with his cabinet nominee, the nomination process is billed to start today. That weakening of the dollar that we saw towards the end of last week could easily continue if some of his nominees are held up as a result of Democrats protesting against the nominations and obviously if that starts to damage his policy agenda, then that could also lead to further dollar weakness as well.
The week in general will see some light event risks, compared to last week that also experience mild data release. Some of the economic releases that will shape the week includes a public speech from the Fed Chair and other notable events of key interest in the U.S. on Friday. Events from China is also expected to cause a sizeable impact in the market. The market is likely to be most active on Friday, while Japan observes a public holiday on Monday.
Starting on Tuesday, we expect to see activity for the Yuan ramp up with the release of the CPI data. The week ends on Friday with the release of Trade Balance data.
The week will be a one with fewer activities for the Sterling, with no event risk scheduled asides Wednesday’s release of the Manufacturing Production data.
It’ll be a mild week for the Australian dollar, aside the release of the Retail Sales figure on Tuesday, everything seems quiet over there.
The week will be an active one for the U.S. dollar starting on Wednesday with the release of the Crude Oil Inventories. The Unemployment Claims number is billed for Thursday. Just as we’ve mentioned earlier, Friday will crown the week with the Fed Chair’s Town Hall meeting speech, along with Retail Sales, PPI and Preliminary UoM Consumer Sentiment data. It is important to also take note of the three members of the FOMC that are due to speak publicly and we could see some big moves in the U.S. dollar if we get any surprise from that quarter.