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Central banks in the spotlight, BoE comments in focus

business-articlesCentral banks in the spotlight, BoE comments in focus
  • Pound benefits as odds of BoE rate cut fall
  • Surge in non-manufacturing index boosts US dollar
  • Canadian dollar slides as BOC cuts interest rates
BoE rate cut speculation fuels pound volatility
Comments from incoming Bank of England (BoE) Governor Andrew Bailey helped to dampen speculation that an emergency interest rate cut could be on the horizon.
As markets had been bracing against the possibility of an abrupt rate cut this encouraged the pound to recover some of its lost ground yesterday.
However, a speech from current BoE Governor Mark Carney could still provoke a degree of volatility for GBP exchange rates this afternoon.
Any hints that a rate cut is on the horizon could weaken the pound.
US dollar vulnerable to decline in factory orders
As the impact of the Federal Reserve’s surprise interest rate cut faded USD exchange rates returned to a positive footing.
An unexpectedly strong improvement in February’s ISM non-manufacturing composite index helped to bolster confidence in the underlying health of the world’s largest economy.
But the US dollar could come under renewed pressure if January’s factory orders data weakens as forecast.
Fresh signs of a slowdown within the manufacturing sector would leave USD exchange rates vulnerable to renewed selling pressure, even if market risk aversion persists.
BOC interest rate cut weighs on Canadian dollar
While investors had anticipated an interest rate cut from the Bank of Canada at its March policy meeting the depth of the cut proved a surprise.
Policymakers opted to cut interest rates by 50bpt, leaving the Canadian dollar on a weaker footing as worries over the economic outlook intensified.
Fresh comments from BOC Governor Stephen Poloz could fuel a further sell-off this afternoon if he maintains a dovish stance.
Upcoming Data:
Thursday, 5th March 2020
15:00 USD Factory Orders
17:00 GBP Bank of England Governor Carney Speech
17:45 CAD Bank of Canada Governor Poloz Speech
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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