The U.S Dollar has largely remained subdued over the last few days as the nomination of Kevin Warsh for the Federal Reserve Chairman has increased speculation of a more dovish Central Bank moving forward, with the aim of keeping interest rates low to stipulate economic growth and employment.
A final decision is still to be made but markets will be watching with full focus centred around what the possible impact will be on interest rates come May onwards.
On top of this, a brief and partial U.S Government shutdown had seen a bit of a Dollar reprieve but that has now come to an end as policymakers approved more government funding earlier this week. This has seen risk removed out of the markets, and has been reflected in the rates with GBP/USD climbing back to highs of last week. It does also mean that the eagerly anticipated Non-Farm data due on Friday will now be delayed.
Turning our attention to the Eurozone, at the top of the hour we have their Preliminary Inflation figures for January due to be released with expectations suggesting prices easing below the ECB’s preferred 2% target. If Inflation figures do dip below 2%, that would raise some level of concern for the central bank as it would suggest demand for goods is dropping, potentially due to a lack of disposable income which could then lead to some fiscal relief in the form of tax cuts to stipulate consumer spending.
GBP/EUR 1.1587 GBP/USD 1.3692 GBP/AED 5.0319
GBP/AUD 1.9514 GBP/CHF 1.0630 GBP/CAD 1.8691
GBP/NZD 2.2751 EUR/USD 1.1804 GBP/ZAR 21.9182