Trade Deficit Narrows but Pound drifts back

Yesterday’s UK trade deficit figures narrowed to a 7-month low in  October, keeping the Pound strong in the morning – but we saw exchange rates against the main currencies fall back in the afternoon with a lack of economic data to support sterling.

Today there is a lot of important data due out so we could see some volatility in exchange rates through the day’s trading. We have already had German inflation this morning, coming in at 0% and dangerously close to deflation, and the Swiss interest rate decision which was held at 0%. The ECB monthly report is out shortly, with Central Bank President Mario Draghi struggling to explain his plans to fuel growth in the single currency bloc this could be one to watch for those of you sending Euros abroad.

Later today we also have a speech from the Bank of Canada Governor, then retail sales in the USA. With only one more full week before Christmas, speeches and data around the world will be coming quickly over the coming days, so we could expect to see volatility in exchange rates. Don’t get caught out and speak to us at Currency Index sooner rather than later.

New Zealand Dollar rate drops 3c overnight

Rates for sending money to New Zealand dropped sharply overnight, as the Kiwi strengthened on the back of the interest rate decision there which was at 8pm UK time. Although interest rates were kept on hold at 3.5%, the NZD gained value after Reserve Bank Governor, Graeme Wheeler, said that they expect a gradual increase in interest rates in the coming months. Higher interest rates make a currency more attractive to investors, which usually makes the currency more expensive, or in other words we see exchange rates fall as a currency’s interest rates rise.

The New Zealand data also demonstrates that currency markets are trading 24 hours a day through the week, and can move just as much overnight as they do during the day.