Central Bank Rate Decisions to Inspire Currency Volatility

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Pound Sterling

Yesterday’s better-than-forecast UK services PMI provided the Pound with an additional boost during the European session and the British currency was able to consolidate gains against peers including the US Dollar and Euro. However, if a pessimistic statement accompanies today’s Bank of England rate decision Sterling could pare its advance.

GBP/EUR is trading in the region of 1.1837 and GBP/USD is trading in the region of 1.5591

US Dollar

With economists forecasting that tomorrow’s US non-farm payrolls report will support the case for the Federal Reserve tapering easing over the next few weeks, the US Dollar is enjoying a bullish relationship with its Asian rival. The ‘Greenback’ approached 100 Yen per Dollar overnight as the Bank of Japan maintained its unprecedented level of stimulus at its latest policy meeting. The currency also gained on the Pound and Euro.

USD/GBP is trading in the region of 0.6414 and USD/EUR is trading in the region of 0.7595

Euro

Euro volatility can be expected to occur today in response to the European Central Bank’s rate decision and growth/inflation outlook. Economists believe that ECB President Mario Draghi will adopt a cautious stance in order to limit over-optimism regarding the Eurozone’s economic recovery.

EUR/GBP is trading in the region of 0.8447 and EUR/USD is trading in the region of 1.3171

Australian Dollar

After achieving a two-week high against its US peer on the strength of better-than-expected domestic growth data, the Australian Dollar declined ahead of tomorrow’s US non-farm payrolls report as investors speculate on the likelihood of the Federal Reserve tapering stimulus in September.

AUD/GBP is trading in the region of 0.5859, AUD/EUR is trading in the region of 0.6941 and AUD/USD is trading in the region of 0.9145

New Zealand Dollar

The ‘Kiwi’ shed recent gains during the local session as predictions for a positive US employment report upped the odds of the Fed scaling back stimulus over the next few weeks. An absence of domestic news means that New Zealand Dollar movement will most likely be driven by global developments in the days ahead.

Along with its fellow commodity-driven assets NZD/GBP is trading in the region of 0.5045, NZD/EUR is trading in the region of 0.5980 and NZD/USD is trading in the region of 0.7877

Canadian Dollar

After the Bank of Canada opted to hold rates, and with positive global developments boosting higher-risk assets, the ‘Loonie’ was able to advance on its US peer. However, with US non-farm payrolls data and domestic employment figures looming the Canadian Dollar may well experience notable fluctuations before the weekend.

CAD/GBP is trading in the region of 0.6109, CAD/EUR is trading in the region of 0.7231 and CAD/USD is trading in the region of 0.9527

These exchange rates were correct as of 9:20 am

Richard Martin
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After working in business development for a major UK currency brokers for several years, Richard left Britain to help set up the company’s Australian office and now lives and works in Queensland; making the most of his new Down-Under lifestyle.