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By xemarketanalysis March 19, 2019 11:01 am
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    XE Market Analysis: The Pound Savors Strong Employment Data and Takes a Break from Brexit Drama

    OVERVIEW

    • The greenback is trading relatively lower against the G-10 currencies ahead of Fed announcement

    • GBP/USD is trading higher after reports show the UK's unemployment rate down to a four-decade low

    • NYMEX WTI approached the $60 psychological level as OPEC looking to rebalance the market

    HIGHLIGHT

    The USD-CAD pair is trading in a tight range with the market waiting for the FOMC meeting (Wednesday). The Fed is expected to keep rates unchanged and to remain “patient” in its approach. Investors will carefully analyse the latest economic projections for future guidance. The Canadian dollar has attracted bids on the back of stable oil prices recently.

    US DOLLAR

    The currency market is trading with a cautious tone ahead of the Federal Reserve meeting. The Dollar Index is soft, down 0.15%. The FOMC meeting will be the highlight of this week, and this morning, we have reports on factory orders. Meanwhile, WTI oil prices clocked a new 2019 high, with the cost of a barrel close to the $60 psychological level.

    BRITISH POUND

    MPs return to the House of Commons after voting against an “improved” Withdrawal Bill, a “no-deal” Brexit and looking to extend the Article 50. The Brexit drama continues with the House expected to hold a third vote this week before Theresa May flies to Brussels seeking a possible extension. The Pound will likely be volatile after recording a trading range of 3.3% last week.

    EURO

    The euro is trading near its highest level in two weeks, on the back of better-than-expected ZEW Indicator readings for Germany. The Index is showing improved expectations, at least for the medium-term. An unexpected delay in the Brexit voting cycle and easing trade tensions between the US and China are the main contributors. EUR/USD has so far erased all ECB-related losses and is expected to consolidate around current levels.

    CANADIAN DOLLAR

    It is Budget day in Canada. The country's Finance Minister will table his final budget before what promises to be a dramatic October Federal election. The loonie has, so far, remained immune to recent political stress. It is defying newsworthy cabinet resignations, a new cabinet reshuffle, and declining popularity for the Canadian Prime Minister and his senior advisors. USD/CAD is supported by firmer oil price action and remains in the 1.3285 – 1.3350 trading range ahead of key FOMC meeting.

    AUSTRALIAN DOLLAR

    Westpac’s monthly report added to speculation that the Reserve Bank of Australia will be cutting interest rates. Australia’s three-year bond rate dropped below the central bank’s policy rate for the first time since 2016. Sliding business performance and retail sales are adding to concerns about economic trends. The RBA has held its cash rate target at its record-low 1.5 percent since August of 2016. 

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