The Pound posted heavy losses against both the Euro and US Dollar on Tuesday as investors bet that the odds of the Bank of England (BoE) cutting UK borrowing costs have increased as a result of growing Brexit fears. With a report compiled by Bloomberg now putting the odds of a rate cut in 2016 at 23%, Sterling slid. Tomorrow’s UK employment data could give the Pound a boost if it shows the increase in average earnings forecast by economists.
US Dollar
As sliding commodity prices boosted demand for safe-haven currencies, the US Dollar advanced on several of its main rivals. Further USD movement could occur before the close of the European session as US Retail Sales, PPI, Business Inventories and Empire Manufacturing reports are released. If US consumer spending is shown to have fallen by more than projected in February the US Dollar could drop in anticipation of a dovish policy statement from the Federal Reserve later in the week.
Euro
With Eurozone employment data showing annual improvement in the fourth quarter of 2015, the Euro was bolstered against the Pound. This report follows yesterday’s above-forecast industrial production numbers for the currency bloc. The EUR/GBP exchange rate advanced by 0.8% on Euro positivity and Pound weakness, but the EUR/USD exchange rate clung to the day’s opening levels.
Australian Dollar
With the minutes from the latest Reserve Bank of Australia (RBA) interest rate decision showing that policymakers are leaving the door open future rate cuts, the Australian Dollar closed out the South Pacific session in a broadly weaker position. Declining risk sentiment in the face of faltering commodity prices also had a negative impact on the asset.
New Zealand Dollar
Commodity price weakness, and the struggling price of dairy produce in particular, left the New Zealand Dollar trending lower against the Euro and US Dollar on Tuesday. Upcoming Current Account Balance data for New Zealand is liable to have an impact on NZD trading.
Canadian Dollar
Falling oil prices and the dimming prospect of an oil production deal being reached in the near future put the ‘Loonie’ under pressure on Tuesday. The currency is unlikely to be much influenced by Canada’s Existing Home Sales report but could fluctuate in response to the slew of US data scheduled for release.
