Euro (EUR) Steadies as ECB Holds Interest Rate at 0%

Published: 10 Sep 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 (GBP)

The Pound (GBP) has remained subdued today as UK markets are becoming increasingly jittery over the prospect of a no-deal Brexit on December 31st. This follows Downing Street’s backtracking on the Withdrawal Agreement, which has sparked concerns that relations between the UK and the EU could be souring.

Today also saw fears rise over the possibility that Downing Street could be preparing to walk away from Brexit talks. This comes after reports that one of the European Commission’s top officials had arrived in London for emergency negotiations with Michael Gove.

Euro (EUR)

The Euro (EUR) rose today after the European Central Bank (ECB) held its interest rates at 0% as widely expected.

The ECB repeated that rates would not rise for some time, saying:

‘The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.’

EUR has benefited from optimistic forecasts for the Eurozone’s GDP figure, with hopes of a rebound from 2020's predicted -8.7% contraction to 5.2% and 3.3% in 2021 and 2022, respectively.

US Dollar (USD)

The US Dollar (USD) shed some of its gains today following a stronger-than-expected JOLTs job opening figures for July, which suggest that the US jobs market is on the road to recovery since the beginning of the coronavirus pandemic.

However, we could see safe-haven demand return for the ‘Greenback’ if US-China trade relations continue to worsen.

This week saw US President Donald Trump talk about the possible ‘decoupling’ of the world’s two largest economies. As a result, markets have reacted negatively to elevated uncertainties over relations between Washington and Beijing.

Australian Dollar (AUD)

The Australian Dollar (AUD) has benefited from a steady surge in risk-on trade today with investors seeming to shrug off recent concerns over US-China trade relations.

Today also saw the release of September’s Australian Consumer Inflation Expectations rise by 3.1%. Consequently, the ‘Aussie’ has benefited from an improving outlook for the economy.

New Zealand Dollar (NZD)

The New Zealand Dollar (NZD) has suffered, however, after a setback in New Zealand’s Card Spending data.

As a result, ‘Kiwi’ traders are worried that the new lockdown measures could further weaken New Zealand’s delicate economy.

Canadian Dollar (CAD)

The Canadian Dollar (CAD) was weakened this week as oil prices tumbled, with US crude prices down by 6.5% at just $37.91 a barrel. As a result, this sparked concerns over one of Canada’s major exports.

Meanwhile, ‘Loonie’ investors will be keeping a close eye on today’s speech from Tiff Macklem, the Governor of the Bank of Canada (BoC). Any dovishness about the Canadian economy would prove CAD-negative.

As of Thursday, 10th September 2020, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.0836, GBP USD exchange rate was 1.2817, GBP AUD exchange rate was 1.7639, GBP NZD exchange rate was 1.9273, GBP CAD exchange rate was 1.6901, and GBP CNY exchange rate was 8.7593.

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