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EUR Plummets after ECB Decision, GBP Softer on BoE Inaction, USD Supported

Published: 6 Nov at 3 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, Germany,

Pound Sterling
The Pound came under considerable pressure on Thursday after UK house prices declined, the annual pace of industrial output in the nation slowed and the Bank of England left interest rates unaltered. The developments conspired to pressure Sterling lower and the currency softened against almost all of its currency counterparts.

US Dollar
Ahead of Friday’s US non-farm payrolls report, the US Dollar was riding high against rivals like the Euro. While the ‘Greenback’s rally paused following a below-forecast ISM non-manufacturing reading, the North American asset was bolstered by larger than projected declines in domestic initial jobless and continuing claims figures. Before the weekend the US Dollar could also be affected by US Consumer Credit stats.

Early in the European session the Euro advanced in response to increases in Germany’s Construction and Retail PMI’s. However, the common currency plummeted after the European Central Bank’s interest rate decision. While borrowing costs were left unaltered, ECB President Mario Draghi asserted that the current bond buying programme would run for two years and that the central bank was united in its commitment to introducing additional stimulus if necessary. The Euro consequently slumped to a two-year low against the US Dollar.

Australian Dollar
Demand for the Australian Dollar was supported overnight as Australia released better-than-anticipated employment figures. Although the reliability of the Australian Bureau of Statistics reports has been called into question, the jobs gain did see the ‘Aussie’ advance on the US Dollar and Pound. AUD/GBP gains were extended as the Bank of England left interest rates on hold.

New Zealand Dollar
A comparatively positive dairy auction and Australia’s forecast-beating employment gain helped the New Zealand Dollar edge higher during the local session. That being said, ‘Kiwi’ gains were a little limited as New Zealand’s QV House Price Index declined from 6.4% to 5.9% on the year in October.

Canadian Dollar
Although lower oil prices have depressed demand for the Canadian Dollar recently, the ‘Loonie’ was able to advance after the number of building permits issued in Canada was shown to have surged in September. The amount of permits issued jumped by 12.7% on the month after declining by -27.3% in August.
As of Thursday, 6th November 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2795, GBP USD exchange rate was 1.5841, GBP AUD exchange rate was 1.8501, GBP NZD exchange rate was 2.0593, and GBP CAD exchange rate was 1.8102.
Dominic Lee About Author: (474 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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