Market Sentiment Improves as the PBoC Stabilise Yuan, GBP Edges Higher on Forbes Comments whilst the Euro Gains on Trade Surplus

Published: 17 Aug at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China,

Pound Sterling (GBP)
In response to hawkish comments from Bank of England (BoE) Monetary Policy Committee (MPC) member Kristin Forbes hawkish comments, the Pound rallied versus its major peers. Forbes stated that she fears holding the cash rate low for longer will hinder the UK’s economic progress. As the European session progressed, however, the British asset softened versus its peers. This is mainly due to speculation that Tuesday’s Consumer Price Index will print poorly and a lack of inflationary pressure will see MPC members happy to hold the lending rate.

Euro (EUR)
With sentiment towards the Hellenic nation improving amid speculation that the debt-riddled nation will unlock financial aid ahead of August 20th when a large payment to the European Central Bank (ECB) is due, the shared currency edged higher versus some of its currency competitors. The appreciation was also helped by Eurozone Trade Balance which saw the surplus widened in June.

US Dollar (USD)
With such differing opinion amongst traders as to the timing of a Federal Reserve rate hike, the US asset is trading relatively statically versus its major peers. Monday afternoon’s domestic data has the potential to provoke movement for the US asset, however. Also, the fact that the People’s Bank of China (PBoC) look to have stabilised the Yuan will support speculation of a near-term Fed rate liftoff.

Canadian Dollar (CAD)
With oil prices close to a six-year low, the Canadian Dollar softened versus many of its currency rivals. Fears regarding policy divergence between the Bank of Canada (BOC) and the Federal Reserve are also weighing on demand for the ‘Loonie’ (CAD). June’s International Securities Transactions, due for publication on Monday afternoon, is unlikely to be hugely impactful on Canadian Dollar movement with oil prices dominating trade.

Australian Dollar (AUD)
Although market sentiment improved as the PBoC look to be in control of the Chinese Yuan, the Australian Dollar softened versus many of its currency rivals. The depreciation can be linked to comments from National Australian Bank (NAB) which warned of the market under pricing the prospect of a near-term Fed rate hike. A report from Goldman Sachs which forecast iron ore prices will cool by 30% within the next 18 months also weighed on demand for the Oceanic asset.

New Zealand Dollar (NZD)
With many traders expecting the Reserve Bank of New Zealand (RBNZ) to ease policy further within 2015, demand for the ‘Kiwi’ (NZD) has been considerably dampened. Ironically this is a positive for the RBNZ which has highlighted overvaluation as a significant pitfall. A slump in dairy prices is also having a detrimental impact on the New Zealand Dollar.
As of Monday, 17th August 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.4069, GBP USD exchange rate was 1.5584, GBP AUD exchange rate was 2.1133, GBP NZD exchange rate was 2.3705, GBP CAD exchange rate was 2.0406, and GBP CNY exchange rate was 9.9654.

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