Cornhill FX Morning Report - 26th April 2017
Whispers of a more hawkish ECB announcement keep the euro well bid...
Yesterday's market chatter over the potential for a more hawkish statement from Mario Draghi kept the euro well supported, allowing it to gain additional ground against both the pound and US dollar. The catalyst for the gains came from Reuters news agency, who released comments from ECB sources stating: some or all references to "prevailing downside risks" to the outlook may be taken out of the statement. Additionally, reference to further possible rate cuts or larger QE purchases may be removed too. As these headlines hit the wire the euro saw a move which took it above $1.09 versus the greenback and below 85p on the EURGBP rate (€1.1764). The euro has held onto these gains heading into the midweek trading session. Should speculation increase over the possibility of a more hawkish Draghi now French election risks appears to have subsided, it's conceivable the euro could continue its progression against the aforementioned currencies.
Rates - 08:00 London
GBP/USD 1.2800 GBP/EUR 1.1730 EUR/USD 1.0920
Today's session is exceptionally light on the economic data front. Outside of Canadian retail sales numbers the market will largely be watching out for President Trump's comments on tax reform. There's been a huge amount of hype over this subject. Every time it's been mentioned by White House officials over the last few months we've seen the dollar immediately boosted along with global stock markets too. The reality is, if Trump doesn't deliver, it's very possible the next bout of significant FX market volatility is spurred by this let down rather than by central banks who have been the largest influence on markets since the financial crisis.
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