Today’s rate @ 08:00 1.1415
Morning Report 22.06.2018
Moneycorp Dealer Team
Drama both sides of the pond and a crisis of confidence for the euro
Government keeps control of Brexit while the market waits on the BoE
The pound struggled for much of yesterday, falling against the US dollar and only just holding its ground against the euro. Whilst the brewing trade wars between the US and China were certainly a factor, the vote yesterday in parliament on the terms of the Brexit bill was also a factor. The government passed the bill 319 – 303, after some last-minute changes and concessions to cast the bill in neutral terms, allowing the Speaker of the House to determine whether the Bill will be amendable. The pound rallied about $1.32 after the vote. While this seems to be the last of the matter, for now, it’s likely that other parliamentary clashes will follow and the upcoming EU summit at the end of the month is likely to have an impact. Before that, the pound will have today’s announcement from the Bank of England to contend with. As the market opened this morning, it had fallen back against the US dollar to $1.3140 in early trading. Analysts are losing hope of an interest rate rise in the near future but will be scouring the accompanying policy statement for some clue as to when the rises might occur.
ECB holding firm on their cautious policy
The euro appears to be suffering a slight crisis in confidence. The currency took a sudden lurch lower in the very quiet trade earlier this morning after European Central Bank governing council member Ewald Nowotny, of Austria, said he expected to see it weaken. The reason given was the divergence of interest rate policies around the world, with the ECB exercising caution while the US ploughs ahead with further rises to support the dollar during the trade crisis. The euro took a knockdown to $1.1535 on the remarks before recovering to $1.1560, down 0.25 per cent on the day.
Today’s rate @ 08:00 1.1415
Nothing holding the US dollar back
A nationwide outcry over the internment of unaccompanied children in migrant camps may have eventually led Donald Trump to promise action on the policy of separating children as young as three months old from their parents but it did nothing to hurt the dollar. While the market elsewhere shows some nerves over the trade war with China, the US appears to be forging its own path with further interest rate rises expected to boost the greenback.
EUR weekly currency update – 15 June 2018
Among the major currencies, the euro was the weakest performer over the last day, week and month. It gave up two and a third cents to the US dollar on the week and four-fifths of a cent to sterling. Economic data from the eurozone were unhelpful: German and pan-Euroland industrial production fell in April and investor confidence weakened appreciably.
It was not the data that did it for the euro though; it was the central banks. First, the US Federal Reserve delivered another interest rate increase with the promise of more to come. Less than 24 hours later the European Central Bank said euro rates would not begin to move higher for at least a year. It did confirm that its asset purchase programme would end in December but that was not enough to appease investors, who marked down the euro by an immediate cent.