United States Dollar: Still all fairly dull on the FX market. Ranges have been tight and data so far has been lacking. UK trade balance data was the only UK release of any note yesterday and it was of little surprise to see that Britain’s trade deficit in December widened to £9.2 billion, its highest level since August 2005. It weighed a little on the pound as GBP/USD fell to a low of 1.6040. The main event yesterday though was Fed Chairman Bernankes testimony to the House of Representatives Budget Committee when he stated that unemployment was likely to be high for some time. The USD weakened as a result and GBP/USD tripped through the 1.6100 figure. It eventually traded to a high of 1.6125 but has settled back to open up the London session at 1.6075 in advance of the Bank of England interest rate decision today. As mentioned earlier this week no change in either base rate or QE is expected, a 15% chance of a hike is now priced in. UK manufacturing and industrial production data is also due for release today.
– Expected range today in the GBP/USD: rate of 1.5980 to 1.6120
– Expected range today in the GBP/EUR: rate of 1.1720 to 1.1800
– Expected range today in the GBP/AUD: rate of 1.5890 to 1.6040
– Expected range today in the GBP/NZD: rate of 2.0860 to 2.0990
Euro: EUR/USD climbed to a high of 1.3732 on the back of Bernankes comments yesterday. The single currency has also been supported by some strong data of late, mainly out of Germany. Figures released yesterday showed that the German trade surplus widened by more than expected too to EUR 14.0 billion. The rally came despite a poor start to the day for the Euro yesterday. It dipped to 1.3610 vs. the USD following rumours and media reports suggesting that Bundesbank President Weber would be standing down and will not seek appointment as the next ECB President. The Euro remains relatively firm against the pound too. GBP/EUR opens at 1.1760.
Aussie and Kiwi Dollars: Australian employment data was the big event for local markets overnight. It turned out to be positive for the Aussie dollar as the figures showed that the number of people employed in January rose by 24,000 from December vs. expectations for 18,400. With Bernankes comments also being USD negative AUD/USD managed to push to a high of 1.0140 overnight. It then transpired that it was actually part time employees that bolstered the labour figures and the Aussie promptly fell back off. Markets are also a little reluctant to add to what are considerable long AUD positions at present. AUD/USD opens this morning at 1.0060. NZD/USD hit a high of .7740 early on yesterday but has been dragged lower with its cousin overnight and it trades at .7675 currently. GBP/AUD opens at similar levels to yesterday morning at 1.5980 whilst GBP/NZD is higher at 2.0930.
