Please find below Wednesdays update by UKForex
United States Dollar:
Ongoing geopolitical tensions in the Middle East and Ukraine continue to dominate the headlines and the uncertainty is hurting risk sentiment. The dollar has strengthened across the board with GBP/USD pushing towards the 1.67 level in the last few hours. Economic data was generally lacking yesterday but a better than expected NAHB Housing Market Index helped to support bids in the dollar. UK CPI has been released in the last few minutes and has shown that inflation has slowed to 1.6% y/y vs. expectations for 1.8% y/y. The pound has gapped lower across the board and at time of writing it is still falling (currently at 1.6640). U.S. CPI is due this afternoon and may have an impact but this might well be limited as investors await the release of the FOMC Minutes on Wednesday and the Jackson Hole Symposium from 21st to 24th August at which Fed Chair Janet Yellen is due to make a keynote speech.
EUR/USD has also been pulled lower over the last 24 hours as the dollar strengthens broadly. Weaker than forecasted European trade data on Monday didn’t help whilst softer than expected current account figures from Europe this morning continue to drag on the single currency. Again the focus for traders in EUR/USD (as well as EUR/GBP) this week will be on the FOMC Minutes and Jackson Hole. GBP/EUR in the meantime has been fairly steady since Monday morning, although it has fallen in reaction to the weak UK inflation figures, trading at 1.2470 currently.
Aussie and Kiwi Dollars:
Weak data out of New Zealand overnight saw the kiwi fall from .8485 to a low of .8420. NZ PPI Output and Input data came in at -1.0% and -0.5% respectively. Also overnight, the minutes from the RBA monetary policy meeting were released – there was nothing new here and the central bank reiterated that the most prudent course was a period of stability in interest rates. They also repeated that the AUD remained high by historical standards. AUD/USD was unaffected and it opens this morning at .9335.
Date Releases for the next 24 hours:
AUD: RBA Gov Stevens Speaks, MI Leading Index m/m
EUR: No data
GBP: No data
NZD: No data
USD: Building Permits, CPI m/m, Housing Starts
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