The Sterling was slightly weaker for the day as the Bank of England didn’t sound as upbeat as expected in their latest policy statement. Governor Carney attempted to downplay the pickup in inflation, despite seeing stronger than expected headline and core CPI readings earlier in the week, by saying that the pound’s recent appreciation could dampen those gains later on. He also added that growth could be subdued in the coming year, weighed down by slower consumer spending and Brexit risks.
GBP/USD slid from 1.2550 to 1.2410, GBP/JPY retreated from 148.50 to the 146.00 levels, EUR/GBP is trying to hold on to the .8400 handle, GBP/AUD is down to 1.6860, GBP/NZD is down to 1.7650, and GBP/CAD is at 1.6550.
Meanwhile, the euro slipped to new lows against the dollar but managed to hold on to its gains versus the Japanese yen. PMI readings from the region’s top economies came in mixed, with Germany’s flash services PMI falling short of estimates. EUR/USD is down to the 1.0400 levels, EUR/JPY is trading at 123.30, EUR/AUD is still consolidating above 1.4150, and EUR/CAD is at 1.3900.
Dollar extends post-FOMC gains
The Greenback continued to reign supreme, as traders continue to incorporate the impact of three more potential rate hikes in 2017. At the same time, economic data supported this optimistic outlook, as the Philly Fed index and Empire State manufacturing index posted stronger than expected gains. Initial jobless claims still reflected positive momentum in hiring while CPI readings came in line with consensus.
USD/JPY is trading above the 118.00 level and is attempting to break past 118.50, USD/CHF is up to 1.0300, AUD/USD is down to .7350, NZD/USD is down to .7025, and USD/CAD came close to testing the 1.3400 resistance. Only US building permits and housing starts data are due today.
Canada reported a surprise 0.8% tumble in manufacturing sales versus the projected 0.7% climb, although BOC Governor Poloz managed to keep spirits up with his positive assessment of housing market trends during the press conference after the release of the BOC Financial System Review. He also lauded the US economy for having an improved outlook and confirmed that the Fed rate hike had been factored in Canada’s economic projections. He assured that the economy was able to manage well after the oil slump, adding that property bubble fears are starting to ease.