British pound hits 2-year low while the market looks to Fed Chair testimony
Peter Compton " | July 9, 2019
The US dollar continues its bullish move since last Friday’s employment report surprise. Markets now await Fed Chair Powell’s testimony before congress tomorrow and Thursday. The British pound lost ground on a poor retail sales indicator and increased probability of a hard Brexit.
July 9, 2019
EUR/USD 1.1207 GBP/USD 1.2469 USD/CAD 1.3124 AUD/USD 0.6934 USD/JPY 108.80 USD/CNH 6.8956 USD/ILS 3.5660 USD/MXN 18.8865 USD/CHF 0.9930 USD/INR 68.5488
The dollar is stronger again today as markets anticipate the Fed will refrain from a series of rate cuts following a better than expected jobs report last Friday. The US economy continues to be one of the strongest in the world while US Treasury bonds have some of the highest yields in the developed world. Both factors lead to demand for US dollars.GBP
The pound sank to its lowest levels vs. the US dollar since April 2017 on economic and Brexit concerns. An industry retail sales indicator showed negative growth for June increasing speculation the UK economy shrank in the second quarter. There is a plan to require parliament to be in session for a specific time frame thereby ensuring that the next PM cannot suspend Parliament to push through a no-deal Brexit.EUR
The euro lost ground to the US dollar for a third consecutive day despite Italian retail sales coming in stronger than expected. ECB committee member Benoit Coeure said in remarks broadcast yesterday that loose policy is needed now “more than ever” and interest-rate cuts and quantitative easing are both on the table; nothing has yet been confirmed.CAD
The loonie is weaker today despite a slightly higher oil price. The Bank of Canada meets tomorrow and markets are not expecting any change to monetary policy.ASIA/PACIFIC
The Japanese yen hit the weakest levels in 5 weeks vs. the US dollar before rebounding some this morning. The markets liked the yen’s safe-haven status when trade talks between the US and China were not going well. There is now hope in the markets that a trade settlement is possible thereby weakening the yen.
The Aussie dollar is lower this morning as commodity prices opened weaker.