Dollar continues to fall

Yesterday’s markets

5th February 2016

  • USD FOMC Member Rosengren Speaks
  • EUR ECB President Draghi Speaks
  • GBP Halifax HPI m/m: 1.7%
  • GBP BOE Inflation Report
  • GBP MPC Official Bank Rate Votes: 0-0-9
  • GBP Monetary Policy Summary
  • GBP Official Bank Rate: 0.50%
  • GBP Asset Purchase Facility: 375B
  • GBP BOE Gov Carney Speaks
  • USD Unemployment Claims: 285K
  • USD Prelim Nonfarm Productivity q/q: -3.0%
  • USD Prelim Unit Labor Costs q/q: 4.5%
  • USD Factory Orders m/m: -2.9%

The Dollar continued to suffer yesterday as the currency market caught up with the message already backed by the bond market that the Federal Reserve will struggle to raise rates again this year. The Greenback weakened throughout the day as EUR/USD rose nearly 1% in yesterday’s session. 

Data wise, the Bank of England released their quarterly inflation report, followed by an interest rate vote and Mark Carney press conference. BoE Governor Carney cited a turbulent global economy as the BoE cut its inflation forecast once again and the sole policy maker who had been calling for higher interest rates changed his mind. The vote is now a unanimous 9-0 in favour of rates to remain at record lows. However, Carney addressed the market in a relatively hawkish tone as he stated that “all MPC members believe the next likely move in rates is up” and that “despite prospects of EU referendum this year, household and business confidence remain robust”. GBP/USD traced higher in the aftermath of the Bank of England announcements. 

Today’s markets

4th February 2016

  • EUR German Factory Orders m/m
  • CHF Foreign Currency Reserves
  • USD Average Hourly Earnings m/m
  • USD Non-Farm Employment Change
  • USD Unemployment Rate
  • USD Trade Balance

In terms of data this is a key day for the US interest rate hawks. The closely watched job numbers are set for release today. Last month we saw payrolls jump to 292k and the unemployment rate hold steady at 5%. Whilst we are expecting the figure to be as high as last month another positive number could put a Q1 rate hike back on the table.