It’s the Dollar that has been dominant in early trading today with the greenback benefiting from a perceived level of progress from Donald Trump’s tax reforms, alongside the relative certainty of a December rate hike from the Federal Reserve.
The Pound has dropped half a percent against the Dollar this morning, eradicating all of cable’s post-UK Q3 GDP reading gains on Thursday with Spreadex analyst, Connor Campbell suggesting “Sterling’s problems can arguably be traced back to yesterday’s retail sales survey from the CBI, which showed that, in October, high street sales plunged at their fastest rate since 2009 – the peak of the recession. ”
As for the euro, its losses can be attributed to Thursday’s ECB meeting, with Mario Draghi adopting a more cautious stance to QE tapering.
FxPro analyst, Edward Anderson commented “The Thursday meeting of the European Central Bank kept Eurozone interest rates at record low levels but, finally, announced the long-awaited reduction in quantitative easing. With the tapering likely to be a slow and gradual process the likelihood of Eurozone interest rates rising in 2018 appear highly unlikely, it is more likely that interest rates will not rise until well into 2019.”
This sent the euro to a 3 week nadir against the dollar, a low that has been further exacerbated by this morning’s 0.3% fall.
It is the Dollar that is likely to remain in focus today with the US Q3 GDP announced early this afternoon which, Accendo Markets analyst Mike van Dulken suggests, “is forecast to have slowed to 2.5% from 3.1% in Q2, holding around the 5-quarter average, supportive of another US interest rate hike by year end. Inflationary metrics are expected to show improvements which would also be supportive.”