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Federal Open Market Committee (FOMC) Minutes Caused an Overnight Stir, Euro, US Dollar, Pound Fluctuate

Published: 20 Aug at 2 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Germany, Greece,

Pound Sterling
With the boost from the unexpectedly positive UK Consumer Price Index all but gone this morning the Pound has been struck a serious blow by uninspiring Retail Sales data. Undermining any remaining trader confidence in the improved level of domestic inflation, the month-on-month and year-on-year figures fell short of expectations to imply that the nation’s economy is continuing to struggle. This only confirmed previous statements by analysts that the CPI rise was more anomalous than indicative of a trend of improvement and decreased the chances of a Bank of England (BoE) interest rate rise coming as soon as hoped. Consequently Sterling entered a downtrend against the majority of its rivals.

Finally the threat of today’s looming European Central Bank (ECB) repayment deadline can be laid to rest as Greece secured the necessary funds to avoid a default, buoying its value across the board. Greek concerns are unlikely to cease, however, with the potential for early elections hanging in the air and an October review of progress by the nation’s creditors to look forward to. Tomorrow’s Consumer Confidence Surveys for Germany and the Eurozone as a whole may provide further stimulus to raise demand for the Euro, however, if they demonstrate economic strength.

US Dollar
Disappointing expectations, yesterday’s Federal Open Market Committee (FOMC) meeting minutes proved to be more on the dovish side, suggesting that a September rate hike may not be on the cards after all. A lack of confidence in inflation rates was cited as the key factor holding the Fed back, a statement not helped by the fact that the US Consumer Price Index clocked in statically as expected. Pundits did not react positively to the revelation, initially turning away from the ‘Greenback’ in favour of rivals, although the trend seems to have turned back this morning upon further reflection.

Australian Dollar
Initially the ‘Aussie’ received something of a boost overnight from the decreased likelihood of a Fed September interest rate hike. This limited rally was not to last, however, as commodity prices have continued to slide as a result of the Chinese economic slowdown. With no further data releases due until the second half of next week the Australian Dollar stands to remain in its present downturn.

New Zealand Dollar
Likewise the ‘Kiwi’ rallied on the faltering of the ‘Greenback’, with the appeal of the risk-sensitive currency rising in comparison. However, comments by Finance Minister Bill English regarding the potential benefits that the New Zealand economy, and its non-dairy exports in particular, may derive from the weakened state of the local currency may offer some encouragement. Following the week’s rebound on dairy prices the New Zealand Dollar stands to remain one of the stronger movers within the Australian basket.

Canadian Dollar
Concerns over China and the global oil glut are still weighing heavily on the ‘Loonie’ today. US crude moved down to its lowest value since 2009 yesterday at $40.35 per barrel as stockpiles increased beyond expectations. Brent, on the other hand, remained somewhat higher even as it slid to $46.56, although with the chances of a pick-up in value a distant prospect, none of this bodes well for the receding Canadian economy. Tomorrow’s domestic Consumer Price Index and Retail Sales are unlikely to be of much support to the ‘Loonie’, even if they trump forecasts.
As of Thursday, 20th August 2015, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.3966, GBP USD exchange rate was 1.5688, GBP AUD exchange rate was 2.1381, GBP NZD exchange rate was 2.3696, GBP CAD exchange rate was 2.0525, and GBP CNY exchange rate was 10.0233.
Patrick James About Author: (289 Posts)Patrick completed his economics degree just as the global financial crisis struck in 2008. In the intervening years Patrick has made his mark, climbing to a prominent position within a large financial services provider. As part of his role Patrick uses his expertise to advise companies of the best ways to safeguard against currency risk.

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