Analysts caution investors on BoE’s undecided stance

Analysts caution investors on BoE’s undecided stance

Sinduja Venkat

Good morning and welcome to today’s foreign exchange market commentary on 19th of July. 

Here are MyCurrencyTransfer.com’s top 5 currency highlights:

  • Analysts caution investors on BoE’s undecided stance
  • EUR/USD closes week on mixed note
  • US equities open in the red
  • LDP led coalition expected to bring good news to Japanese economy
  • AUD/USD spikes on PBoC move

CURRENCY RATES OVERVIEW 

GBP/EURO – 1.1629
GBP/USD – 1.5265
GBP/CHF – 1.4369
GBP/CAD – 1.5845
GBP/AUD – 1.6561
GBP/ZAR – 15.0793
GBP/JPY – 152.8988
GBP/HKD – 11.8428
GBP/NZD – 1.9166
GBP/SEK – 9.9956

Mid-market rates as of 2013-07-19 14:05 UTC

Key releases in the next 24 hours that may affect currency date:

Australia: No Data
Europe: EUR G20 Finance Ministers’ and Central Bank’s Deputies Meeting in Russia, EUR G20 Labour Ministers Meeting in Russia, EUR G20 Finance Ministers and Central Bank Governors Meeting in Russia
United Kingdom: GBP Public Finances (PSNCR) (Pounds) (JUN), GBP PSNB ex Interventions (JUN), GBP Public Sector Net Borrowing (Pounds) (JUN)
New Zealand: NZD Credit Card Spending (YoY) (JUN)
United States of America: No Data
China: No Data
Canada: CAD Consumer Price Index (MoM) (JUN), CAD Consumer Price Index (YoY) (JUN), CAD Bank Canada Consumer Price Index Core (MoM) (JUN), CAD Bank Canada Consumer Price Index Core (YoY) (JUN)
Japan: JPY All Industry Activity Index (MoM) (MAY)

Analysts caution investors on BoE’s undecided stance

Market observers are now indicating that the overall view of investors is that the BoE will do everything in its power to maintain a moderate degree of ‘froth’ within the interest-rate sensitive sectors of the economy for as long as it can without driving things “too far”. However they have motioned that rather than buy GBP aggressively on much better-than-expected data, a better bet would be to position for GBP topside on a 1-2 month basis on bets that BoE rhetoric may at times shift to more hawkish surprisingly quickly, despite the tone of the July statement.

EUR/USD closes week on mixed note

EUR/USD lost momentum on Friday, despite a short-lived bounce in the wake of PBoC liberalizing measures. EUR/USD pair remained capped below 1.3140 and settled in a range where it has spent the last hours. With the economic calendar clear for the rest of the day, EUR/USD could take cues from stocks for the rest of the session.

US equities open in the red

The US stock markets opened in the red on Friday following a week of advances. Beginning with the indices and composites, the NASDAQ fell -0.77% as it settles in region of 3583.19, down -27.77 points in these moments. In addition, the S&P 500 is trading in negative territory, operating at 1685.29, descending -2.53 points or -0.15% at the time of writing. Finally, the Dow Jones has moved lower at the opening, trading in the zone of 15509.30, presently -0.25% after a movement of -39.24 points.

LDP led coalition expected to bring good news to Japanese economy

Analysts have noted that there seems to be little doubt that the period of a divided Diet is over and that the LDP-led coalition will take control of the upper chamber through a solid majority. According to them, if the Abe government is successful in putting the economy on a sustainable growth track, then implementing the retail sales tax next April would be a likely scenario.

AUD/USD spikes on PBoC move

The AUD/USD pair saw a quick spike higher after the People’s Bank of China announced it will remove controls on lending interest rate, allowing banks to set them. AUD/USD rallied on the news, gaining over 60 pips in a matter of minutes to score a fresh daily high of 0.9233 before losing momentum. China will according to its statement, scrap the official floor under banks’ lending rates as the first major step to liberalize its interest rate regime to cope with distorted capital flows and slowing economic growth. The PBoC also said in a statement on its website that it would remove controls over bill discount rates. However, it didn’t remove the cap on deposit rates.

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