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By xemarketanalysis July 23, 2018 1:50 pm
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    XE Market Analysis: Sterling Feeling the Brexit Heat

    OVERVIEW

    • Sterling looks fragile on Brexit concerns.
    • Japanese Yen bounces on BOJ report.
    • Euro eyes the ECB rate decision later in the week.

    HIGHLIGHT

    The Japanese Yen has soaked up a large percentage of the buying activity this afternoon after a report surfaced that the Bank of Japan was debating scaling back its enormous monetary stimulus program. This sent traders into buy mode for the safe-haven currency. 

    US DOLLAR

    The US Dollar continues to feel the effects of President Trump's comments last week on the impact of a strong Dollar. The concern here is that the currency could become the next piece in the global trade war.

    BRITISH POUND

    Sterling looks unstilled today as the persistent Brexit negotiation stress and political instability weigh on the currency. The risk of a hard Brexit with no deal is constantly a source of weakness for the Pound and with the summer recess for the UK Parliament beginning tomorrow - volatility looks set to remain for the foreseeable future. 

    EURO

    The Euro is focusing on the ECB interest rate announcement due later in the week, where markets are pricing in less than a one per cent chance of an interest rate hike. Any commentary from the ECB on the future of interest rates could have an immediate impact. 

    CANADIAN DOLLAR

    The Loonie is on the front-foot this afternoon after Canadian wholesale trade sales outperformed expectations, coming in at 1.2% against an expectation of just 0.7%. This will marginally increase the percentage chance of an interest rate hike in October by the Bank of Canada - which in turn will strengthen the currency. 

    AUSTRALIAN DOLLAR

    The Aussie Dollar consolidated gains from late last week after Donald Trump’s comments fueled the risk of a currency war. The Aussie Dollar, however, is still struggling to gather any significant demand with the interest rate differential heavily against the Aussie currency. 

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