Pound Rallies as BoE Boosts Quantitative Easing

Australian Dollar (AUD) Bolstered by Widened Trade Surplus

The Australian Dollar (AUD) pushed higher across the board on the back of a surprise widening of September’s trade surplus, from A$2.61 billion to A$5.63 billion and driven by a 4% jump in export volumes.

Coupled with easing market anxiety over the uncertain outcome of the US presidential election, this encouraged the Australian Dollar to make gains against its rivals.

Even so, AUD exchange rates still look vulnerable this morning with the release of the Reserve Bank of Australia’s (RBA) Statement on Monetary Policy.

Pound (GBP) Rallies as BoE Fails to Mention Negative Interest Rates

The Pound (GBP) rallied as the Bank of England (BoE) increased its quantitative easing programme by a greater degree than anticipated.

With an additional £150 billion set to be pumped into the UK economy, investors were relieved as policymakers failed to make any fresh mention of negative interest rates. This limited the impact of the BoE’s cautious economic forecasts, which point towards the economy contracting -11% in 2020 as the UK experiences a double-dip recession.

In the absence of notable economic data releases at the end of the week, the Pound will likely be driven by market sentiment and any news on Brexit-related progress.

Euro (EUR) Under Pressure Due to German Factory Orders Miss

The Euro (EUR) faltered during Thursday’s European session thanks to a weaker-than-expected German factory orders figure.

Disappointment greeted news that orders had only experienced growth of 0.5% on the month in September, a significant slowdown from the previous month’s 4.9% surge. With confidence in the economic health of the Eurozone’s powerhouse economy already faltering, this underwhelming reading left the Euro on the back foot.

Unless the corresponding German industrial production figure shows a strong uptick on the month support for the single currency may remain limited today.

US Dollar (USD) Unable to Hold onto Initial Post-Election Gains

The US Dollar (USD) failed to hold onto its initial post-election boost as an air of uncertainty continued to hang over the results.

USD exchange rates began reversing their gains as, despite some uncertainty over the election result, market sentiment improved with Biden appearing to edge ahead, weighing on the ‘Greenback’.

However, as forecasts point towards a modest improvement in October’s unemployment rate this could offer USD exchange rates a boost heading into the weekend.

Canadian Dollar (CAD) Slides Ahead of Labour Market Data

The Canadian Dollar (CAD) struggled to capitalise on a wider improvement in market sentiment overnight.

Although markets adopted a more risk-positive mind set, the Canadian Dollar remained lacking in support thanks to lingering oil market weakness. Meanwhile, Growing anticipation ahead of October’s set of Canadian labour market data also put a dampener on CAD exchange rates.

If October’s unemployment rate falls from 9% to 8.8% as forecast, this could see the mood towards the Canadian Dollar improve, with lower unemployment easing worries over the economic outlook.

New Zealand Dollar (NZD) Makes Gains as Risk Appetite Recovers

The New Zealand Dollar (NZD) gained ground yesterday in response to the relative weakness of the US Dollar.

With market jitters over the lack of an immediate, clear winner in the US presidential election easing, the mood towards the New Zealand Dollar improved. While worries over the outlook of the global economy remained, this was not enough to keep NZD exchange rates from staging an uptick.

However, any deterioration in market sentiment could easily see the New Zealand Dollar reverse course once again.

Data Releases

11:30 AUD Reserve Bank of Australia Statement on Monetary Policy
18:00 EUR Germany Industrial Production (Sep) 2.7%
19:30 GBP Halifax House Price Index (Oct) 0.5%
00:30 CAD Unemployment Rate (Oct) 8.8%
00:30 USD Unemployment Rate (Oct) 7.7%

Louisa Heath