Quiet Start For Sterling

With no UK data to go on yesterday markets looked elsewhere to get some direction for trading sentiment. The pound is still under pressure from the upcoming UK elections so any gains were likely to be stunted which indeed they were.

There was a lack of ecostats anywhere, but we did have German inflation figures early in the day which came out lower than expected giving the euro an early downward slide against the pound and US dollar. Sterling gained half a cent whilst the dollar took ¾ of a cent pushing the pairing that little bit closer to parity. Sentiment seemingly went back towards the greenback as sterling/dollar also dropped off following the German figures as the pound lost half a cent. The only other data of note was a speech by the Canadian central bank chief Poloz but his comments made little impact on the Loonie which barely saw any movement at all.

Overnight down-under there was an early speech by Governor Glenn Stevens ahead of the release of the RBA minutes from earlier in the month. Having lost over 2 cents to sterling over the course of Monday’s trade would the minutes help or hinder the weakening Aussie?

With the release of the minutes markets discovered why the RBA had withheld on an interest rate cut early this month, as they want to wait and see how other forces work out before making that move. As with the UK AND US, inflation is the key topic they’re keeping an eye on and with recent commodity price rises and weakening dollar, clearly now is not the time. Some good news for anyone sending money to Australia is that we could expect to see the Aussie weaken further but of course with the elections here in just over two weeks it’s likely this could be short lived.

Today we again lack any releases from the UK so we could see much of the same from yesterday. German and EU ZEW economic sentiment surveys are releases first thing whilst after lunch the low key US Redbook index economic survey comes out just after lunch. Overnight we go back to our antipodean cousins as the Aussie inflation numbers get released.

With a lack of data again and sentiment with the US dollar, we could see much of the same range bound trading as Monday. Anyone looking to buy US dollars might be better off trading sooner rather than later just in case the dollar surge continues and euro buyers beware of the stats coming this morning in case they post better than expected giving the euro a boost.