US Dollar Exchange Rates Worsen after Temporary Inflation Rate Boost

Published: 14 Feb at 5 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada,

Pound Sterling (GBP)

The Pound was able to advance against the Euro and US Dollar on 14th February, although was mainly down to weakness in the other two currencies.

UK data wasn’t especially positive; in addition to the IMF warning about lower UK productivity levels, Foreign Secretary Boris Johnson’s Brexit defence speech had a poor reception.

The Pound could post further losses on 16th February, if UK year-on-year retail sales slow as they are forecast to.

Euro (EUR)

Mixed responses to Eurozone GDP data weakened the Euro on 14th February, causing a loss against the Pound but a small advance against the US Dollar.

The problem was that Eurozone GDP growth was reported to have slowed in Q4 2017, which has negative implications for future European Central Bank (ECB) monetary policy.

The Euro may regain lost ground on 15th February, as the Eurozone trade surplus for December is tipped to swell from 26.3bn to 30.2bn on the day.

US Dollar (USD)

The US Dollar briefly spiked against the Pound and Euro on the afternoon of 14th February, but has since fallen back to post losses of over -0.4% in both pairings.

The headline news was that US inflation either remained steady or rose in January, going contrary for forecasts for slowing price growth.

This firmed suspicions that there could be three Federal Reserve interest rate hikes in 2018, although not all economists were so captivated by the inflation stats.

The other news was that US retail sales slowed dramatically in January, a fact which wasn’t entirely discounted as a one-off by all economists.

The US Dollar might fall further on Friday afternoon, if the University of Michigan consumer confidence reading shows a slowdown as predicted.

Australian Dollar (AUD)

On 14th February, the Australian Dollar rose in value against the US Dollar but declined against the Pound and Euro.

This mixed performance came after NAB business confidence data showed rising levels of optimism and perceptions of conditions, to almost historic levels.

More recent AU data, however, has seen Westpac bank report falling levels of consumer confidence during the current month.

The Australian Dollar might rally on 15th February if national employment data shows a significant increase in the number of employed persons.

New Zealand Dollar (NZD)

Significant New Zealand Dollar gains were seen on 14th February, thanks mainly to the sharp decline in the US Dollar’s value.

On the homefront, the NZD was also supported by rising business expectations for national inflation; estimates were upgraded from 2% to 2.1%.

The New Zealand Dollar may rise further if 15th February’s business PMI reading increases as expected – this would indicate higher overall business activity in January.

Canadian Dollar (CAD)

While the Canadian Dollar advanced against the US Dollar on 14th February, it otherwise declined against both the Pound and the Euro.

This limited CAD demand stemmed from warnings from Canadian banks – two major institutions cautioned that investment in Canada could gradually move to the US due to more favourable tax conditions south of the border.

Rounding off weekly data, Canadian manufacturing sales stats will be out on 16th February.

If these show a -0.1% slowdown in sales as predicted, the Canadian Dollar could slide in value against the US Dollar and other regular peers.
As of Wednesday, 14th February 2018, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.1241, GBP USD exchange rate was 1.4013, GBP AUD exchange rate was 1.768, GBP NZD exchange rate was 1.9007, and GBP CAD exchange rate was 1.7495.

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