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Pound (GBP) Sees Upbeat Data, US Dollar (USD) Awaits Yellen Speech

Published: 15 Jul at 11 AM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, South Africa,

Great British Pound (GBP)

The UK has seen extremely positive results from the release of the Consumer Price Index today, with it beating expectations for an annual rise in June of 1.6%(up from May’s previous 1.5%) and achieving 1.9% Year-on-Year. Month-on-Month the figure has risen by 0.2% following a previous decline of -0.1% in May. Consumer prices had been forecast to fall by another -0.1% in June. However, the UK’s Producer Price Index Output figure, which registered an increase of 0.5% in May, rose by 0.2% in June instead of posting another 0.5% gain. Overall the UK has produced favourable results, which may give the Pound strength against the US Dollar later today when Fed Chairwoman Janet Yellen makes her annual testimony to the Senate Committee.

Euro (EUR)

The Eurozone has been advised by the International Monetary Fund (IMF)that if inflation levels remain too low in the Eurozone that Quantitative Easing should be put in place. Linda Yueh for the BBC stated: ‘The International Monetary Fund also answers the “how” question that has been under debate. They recommend that the ECB buy government bonds in proportion to the capital key of the central bank.’ The Euro is currently trading down against the US Dollar at 1.3609.

US Dollar (USD)

The US Dollar is trading lower today as investors await the eagerly anticipated speech by Fed Chairwoman Janet Yellen this afternoon. It is hoped that Yellen may give an optimistic statement for the US economy. An expert in the field, Peter Kinsella, stated: ‘The key is US yields, and if they’re not moving higher, it’s unlikely to translate into anything substantial for the Dollar.’ Tuesday will also see the release of June’s US Advance Retail sales which is currently forecast to show a monthly increase of 0.6% in June following the previous month’s 0.3% gain. An advance this strong could also prove favourable for the ‘Buck’.

Canadian Dollar (CAD)

The Canadian Dollar is currently trading at 0.9322 against the US Dollar before Wednesday and the Bank of Canada’s interest rate decision.. The BOC has consistently kept their interest rate at 1% for nearly four years. The policy statement accompanying the interest rate decision will discuss Canada’s economic performance, so investors will be taking an interest in this. A currency specialist, Mark Chandler, stated: ‘We will also be looking for any comments about the recent strengthening of the Canadian Dollar and the risks it may pose.’

Australian Dollar (AUD)

The Australian Dollar is currently trading at 0.9387 against the US Dollar following the July meeting minutes released by the RBA on Tuesday. The meeting minutes stated: ‘At its recent meetings, the Board judged that it was prudent to leave the cash rate unchanged. Low interest rates were working to support demand, but members agreed that it was difficult to judge the extent to which this would offset the anticipated substantial decline in mining investment and the effect of planned fiscal consolidation.’ Tuesday afternoon will see Janet Yellen of the US Federal Reserve making a speech, which could cause an alteration in the AUD/USD currency pairing.

New Zealand Dollar (NZD)

The New Zealand Dollar is currently trading at 0.8790 against the ‘Greenback’ ahead of the release of New Zealand’s Consumer Price Index later on Tuesday and Fed Chief Janet Yellen’s speech in the US. The US Dollar is expected to see some movement after Yellen’s speech takes place and while the ‘Kiwi’ has recently been trading at highs, it may soften if Yellen offers encouragement to investors. Foreign exchange expert, Imre Speizer, stated that Yellen: ‘might be less dovish, which would push up the US Dollar and weaken the “Kiwi”’.

South African Rand (ZAR)

NUMSA members rejected the latest offer in a series of negotiations between employers and strikers to end the current metal working strike. A spokesperson for NUMSA, Irvin Jim, stated: ‘NUMSA further wants to inform the public the continuation of this strike is now being driven by employers with their provocative demands.’ The continuation of the strike will involve NUMSA members procuring other workers from other sectors to widen the strike. With no end currently in sight, the South African economy becomes more fragile every day with fears of recession prominent. The US Dollar is currently trading against the South African Rand at 10.7135.
As of Tuesday, 15th July 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2634, GBP USD exchange rate was 1.7141, GBP AUD exchange rate was 1.8295, GBP NZD exchange rate was 1.9638, GBP CAD exchange rate was 1.8437, and GBP ZAR exchange rate was 18.3577.
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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