11th October 2018-Dollar registered losses as bond yields declined and President Trump renewed criticism of Fed policies

 

     

Dollar registered losses as bond yields declined and President Trump renewed criticism of Fed policies

Equity markets declined sharply with the largest US retreat for 8 months as risk appetite slumped amid fears over higher US interest rates. The VIX volatility index also spiked higher as Chinese stocks hit the lowest level for close to 4 years with losses of over 5%.

Brexit optimism again underpinned Sterling and helped support the Euro, but risk aversion undermined commodity currencies.

The US dollar registered net losses as bond yields declined and President Trump renewed criticism of Fed policies while defensive demand boosted the yen.

A slide in risk conditions and large inventory draw pushed oil prices lower and gold was able to secure only limited support despite risk aversion.

The slide in risk conditions also contributed to sharp losses for Cryptocurrencies.

UK GDP was unchanged for August compared with expectations of a 0.1% gain, although there was an upward revision to 0.4% for July.  NIESR data was optimistic with an estimate that GDP grew 0.7% in the third quarter and was likely to expand 0.5% in the final quarter of 2018 which protected Sterling. Bank of England Chief Economist Haldane expected gradual UK wages growth and commented that market interest rate expectations were broadly in line with central bank expectations.

There were also optimistic comments from EU Chief Negotiator Barnier who stated that a deal is within reach by October 17th and that there is no reason not to deepen UK-EU trade in future negotiations. There were still important concerns surrounding Northern Ireland as the DUP defended their red-line position and Prime Minister May is set to brief the Cabinet on Thursday amid fears that the government would fail to secure parliamentary approval for any deal.

GBP/USD pushed above the 1.3200 level before fading while GBP/EUR was held near 3-month highs above 1.1460. Sterling was hampered to some extent by a slide in risk appetite and lower oil prices, but GBP/USD moved back above 1.3200.

     
 
       
 

GBP/EUR 

– 1.1428
 
 

GBP/USD

– 1.3200

 
 

GBP/CHF 

– 1.3043

 
 

GBP/JPY 

– 148.26

 
 

GBP/AUD 

– 1.8623

 
 

GBP/NZD 

– 2.0363

 
 

GBPCAD

– 1.7206

 
 

GBP/ZAR 

– 19.2690

 
 

GBP/NOK 

– 10.8613

 
 

GBP/SEK 

– 12.0122

 
 

EUR/USD 

– 1.1545

 
       
  All rates are indicative of interbank rates*  
       
 
 

GBP/EUR

 
 

GBP/USD 

 
 

EUR/USD 

 
       
 
   

11:45 GBP

BoE MPC Member Gertjan Vlieghe Speaks

-

-

 
   

12:30 EUR

ECB Monetary Policy Meeting Accounts

-

-

 
   

13:30 USD

US CPI (Y/Y)

2.80%

2.70%

 
   

13:30 USD

US CPI Ex Food & Energy (Y/Y)

2.30%

2.20%

 
 
   
 
 
*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time.  CentralFX are not responsible for the rates shown.
 
 
 

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