Dollar Strengthens, Sterling Weakens on the FX Market
The U.S. dollar continues to be in demand today. It was after the Federal Reserve did nothing to indicate any near-term easing of policy despite announcing a statement that seen as slightly less positive regarding the economic outlook.
However, sterling may possibly be the currency to keep an eye on in early trading in Europe. It is because the Bank of England happens to decide on its monetary policy.
The US Dollar Index Futures that tracks the greenback versus a basket of other currencies inched up 0.1% to 97.895 in the foreign exchange market. Currently, it is trading nearly to a two-month high.
Moreover, the greenback is the most significant performing currency among G10 currencies in January. It is along with the dollar index improving 1.6% so far this month.
On the other side, commodity currencies such as the loonie and Aussie have suffered most. It was for the reason of suspicions for Chinese growth amidst a spreading coronavirus plague.
As of late Wednesday, China’s National Health Commission stated that the overall number of confirmed deaths has gone 170. It is with the number of affected patients looming 8,000.
In a news report, infections registered were at least 15 other countries. The virus is also circulating in all every province of mainland China.
To add, this virus plague has resulted in difficulty with many emerging currencies. It is with investors looking for the safe-haven status of the dollar.
Meanwhile, the offshore Chinese yuan briefly moved 7 to the dollar again. The matter happened overnight before bolstering just above that level later.
Sterling Seen To Be Unstable
Elsewhere, sterling may perhaps be volatile on the same day. It is with a degree of ambiguity bordering the conference of the Bank of England’s Monetary Policy Committee.
In some forex trading, the GBP/USD pair traded at 0.2% softer at 1.3001. On the other side, the EUR/GBP pair 0.2% greater at 0.8468.
At the beginning of the year, the Bank of England was broadly in anticipation of cutting interest rates at this summit.
Meanwhile, a number of MPC representatives, comprising Governor Mark Carney, have spoken publicly concerning the shaky state of the U.K. economy.
Carney has indicated that the uncertainty encircling the country’s exit from the European Union will come into effect on Friday.
Nevertheless, economic data since then have been commonly more positive than anticipated.
In a research note, analysts at Danske Bank said, “Despite a few economic data releases that came stronger than expected, we still expect the BoE to cut the Bank Rate by 25bp.”
The bank added, “However, it is possible to be a close call, which is also reflected in market pricing, as investors are pricing a 45% probability of a cut, leaving some upside in EUR/GBP if we are right in our call.”
Get the latest economy news, trading news, and Forex news on Finance Brokerage. Check out our comprehensive trading education and list of best Forex brokers list here. Subscribe now and receive FREE updates on the market today!