The British pound has started to recover, with the euro reached a two-week high amid uncertainty regarding the Brexit deal. The main currencies benefited from the decline of the USD, while oil prices are rising on the back of the latest OPEC news.
The dollar index, which tracks the performance of the greenback versus the six major currencies, was lower for a third consecutive session. The Asian trading session saw the USD / JPY pair reaching low levels, as the trend towards selling increased. The yen, yesterday’s worst performing currency, also benefited from the US dollar’s decline. The yen rose 0.2% to 111.45 against the dollar today, managing to break the resistance level at 111.312.
Provided that the Federal Reserve shows an uncertain outlook for growth and interest rates, this will most likely impact US equities, which would be negative for the dollar. The risk here is that, regardless what the outcome will be, it might push down even further the USD/JPY pair.
The AUD / USD pair fell from a two-week high. The bearish situation worsened following the release of the weak Australian price index. The index reported a 2.4% drop on a quarterly basis, below the 2.0% market forecast. The Reserve Bank of Australia (RBA) discussed earlier in the day a monetary minutes showing an uncertain position on the country’s economic outlook. The RBA said there are fewer opportunities to change interest rates in the near future.
The pair hit today’s low of 0.7089. According to market forecasts, if the FOMC’s latest monetary policy, scheduled for Wednesday, announces a rate cut, it will have a major impact on the pair.
The Sterling showed mixed fluctuations on Tuesday morning amid the losses of the last day against the opposite currencies, namely the USD and the Euro. The GBP / USD touched the 1.3290 high in the morning session. The rally began to fade after the UK labor market report, which showed mixed figures. The unemployment rate was down 3.9% in January. The average earnings during the same period was 3.4%, higher than the previous month. Another important indicator is the Claimant Count Change, which measures the change in the number of unemployed claims in the United Kingdom, and was 27.0K for the month of February. This change was higher than expectations, which were of only 13.1 thousand.
The British pound is now waiting for signs of progress in Brexit talks. Speaker of the House John Bercow rejected a third vote. The Bank of England is expected to keep interest rates unchanged at its policy meeting on Thursday, amid the uncertainty surrounding Brexit.
The German ZEW Economic Sentiment was higher than market expectations. The index was reported to drop to -3.6 compared to consensus estimate of -11.1. Furthermore, the uncertainty surrounding Brexit has pushed the Euro to new support lines during the day. The The EUR / USD pair traded at a two-week high of 1.1360.
Crude prices rose after OPEC declared that they had canceled the next meeting, which was scheduled for April. West Texas Intermediate (WTI) prices hit $59.55 a barrel, the highest recorded level since November 2018.
USD / CHF hit a 2-week low of 0.9994 throughout the session. Analysts claim that the selling pressure that currently surrounds the USD index is the most important factor behind the pair’s decline.