No rate cut by Bank of England, but dovish takeaway
Scott Petruska, CFA " | November 7, 2019
The Bank of England kept rates unchanged, but two members of their Monetary Policy Committee unexpectedly voted for a rate cut. The UK pound quickly dropped, and now approaches $1.28. The dollar index held steady. A general risk-on mood pushed global equities and bond yields higher after China and the U.S. agreed to roll back tariffs on each other’s imports.
November 7, 2019
EUR/USD 1.1067 GBP/USD 1.2816 USD/CAD 1.3177 AUD/USD 0.6897 USD/JPY 109.20 USD/CNH 6.9734 USD/ILS 3.4918 USD/MXN 19.1492 USD/CHF 0.9936 USD/INR 70.9650
The dollar index changed little overnight but had mixed performances against its peers. It gained against the GBP, but weakening against most other currencies, fueled by the risk-on mood.GBP
The Bank of England kept its benchmark interest rate unchanged at its Monetary Policy Committee meeting, but the pound sold off after two MPC members unexpectedly voted for a rate cut amid Brexit uncertainty and slowing global growth. The pound is near $1.28, well below highs seen near $1.2975 last week.EUR
The euro is up on the day as risk appetite improves on positive US-China trade news. Aggressive selling of the UK pound / euro cross helped fuel euro gains.CAD
The Canadian dollar edged higher following the good trade news. Traders look forward to Canada’s monthly jobs report due Friday to estimate the outlook for Canada’s central bank policy.ASIA/PACIFIC
The Chinese yuan rallied for the eighth straight day, and now trades below the key 7 yuan per dollar for the third day. Strength in the yuan is an important sign of optimism with the US-China trade war. China’s Ministry of Commerce said an agreement was reached with the U.S. to a phased rollback of tariffs on each other’s imports.
The USD/JPY currency pair moved above 109, as the risk-on mood reduces demand for the safe-haven yen.