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Forex News

11/23/2017 17:25:09

FX round-up: Sterling steady while euro moves up for third day

(ShareCast News) - News out for the UK on Thursday showed second estimate GDP quarter/quarter came in as expected, 0.4%, while the latest minutes from the European Central Bank (ECB) eluded to a discussion about cutting the current bong buying programme.
Following the release of the Autumn budget on Wednesday, cable enjoyed a healthy rise taking the pair back to pre interest rate hike levels, hitting a high of 1.3337 in Asia trading.

The Office of Budget Responsibility (OBR) cut UK growth forecasts on Wednesday, but this does not seem to have dampened the appetite for market participants to bid sterling higher against the dollar.

"The OBR's position on the weakness of productivity and the dismal economic outlook isn't exactly new news - we knew all of that before," said Societe Generale macro strategist Kit Juckes.

Sterling showed little reaction to data released on Thursday showing that the economy grew at 0.4% in the third quarter of this year, as expected, with households increasing the pace of their spending.

A bank holiday in the US played some part in reduced volume on the market on Thursday as sterling fell 0.17% to 1.3301 against it's US counterpart, while the dollar index slipped 0.09% to 93.133 by 1555 GMT.

Sterling lost further ground against the euro trading 0.41% lower to 1.1226 as minutes were released from the latest ECB policy meeting.

"There is a general trend of euro-positive sentiment going through the markets and that is keeping the euro firmly supported and the ECB minutes were along expected lines," said Commerzbank currency strategist Esther Reichelt in Frankfurt.

This positivity helped the single currency rally 0.24% higher against the dollar to 1.1851, also aided by a string of positive figures for the eurozone which showed that manufacturing and services PMI numbers were up for both France and Germany.

"The economy seems to be on autopilot for now, not dependent on reform or leadership to the same extent as in 2003-04, when the euro zone required reforms and thus strong leadership," Morgan Stanley strategists said in a note.

Over in the "great white North", the Canadian dollar received some disappointing news in the form of worse than expected retail sales and core retail sales figures, coming in at 0.1% and 0.3% respectively.

The data is negative for the Canadian dollar and positive for the front end of Canada's yield curve, "which still has some work to do in pricing out a January hike," Nick Exarhos, an economist at CIBC Capital Markets, wrote in a research note.

USD/CAD traded 0.18% higher to 1.2719 by 1610 GMT, finding support at 1.2669 as it did on 10 November.

The Bank of Canada raised interest rates in July and September for the first time in seven years but has since turned more cautious about the outlook for the domestic economy.

Trading was generally muted due to the bank holiday's in the US and Japan, as a result, the Australian dollar traded fairly flat on the day, managing only a 0.1% move higher against the greenback to 0.7625 by 1620 GMT, hitting a day high of 0.7639 earlier.

Overall, the Aussie's appeal as a carry currency has diminished in recent weeks, with U.S. two-year bond yields surpassing Australian yields for the first time since 2000.

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