GBP boosted by not so dovish MPC minutes

United States Dollar:

The Bank of England minutes released yesterday showed that two MPC members had voted to raise interest rates at November’s meeting. It was in line with previous statements, but was perhaps a bit of a surprise given the dovish inflation report last week and the recent disappointing run of UK economic data. Of the seven MPC members that voted to leave rates on hold there were some that thought spare capacity would be used up more quickly than the bank’s latest set of forecasts. It was enough of an excuse for investors to bid the pound higher, with GBP/USD jumping from 1.5950 to 1.5695 and going on to trade to a high of 1.5717 following the US FOMC minutes. These minutes failed to make any kind of impact on currency markets. Members debated whether to omit the phrase “a considerable time” when referring to when it might raise the Fed funds rate, but that’s about as interesting as it got. GBP/USD continued trading a steady range in Asia – it opens this morning at 1.5660 ahead of UK retail sales and US CPI today.

Euro:

EUR/USD spiked to 1.2586 yesterday after the release of the FOMC minutes. The range in EUR/USD has been generally steady over the last 24 hours though, with little top tier European data released yesterday. It’s been a different story this morning with French and German PMI’s having been released an hour or so ago. The readings were disappointing vs. market forecasts and especially so following the better than expected French GDP data and German ZEW earlier in the week. EUR/USD has fallen back in response and currently trades at 1.2505. The single currency is also weaker vs. the pound and GBP/EUR opens in London at 1.2505.

Aussie and Kiwi Dollars:

AUD/USD has drifted quietly lower over the last day. HSBC Flash Manufacturing PMI from China printed very slightly weaker than market expectations overnight which weighed a bit on the aussie. The continued softness in commodity currencies is making it hard going for the local unit too at the moment. NZD/USD has also fallen, although by a lesser degree, over the last 24 hours. Producer price data released overnight from NZ printed a lot weaker than market forecasts, but it didn’t come as a surprise given the recent slump we’ve seen in dairy prices. NZD/USD trades at .7840 currently.

Data releases for the next 24 hours:

AUD: No data

EUR: Flash Manufacturing PMI, Flash Services PMI, Consumer Confidence

GBP: Retail Sales m/m, CBI Industrial Order Expectations

NZD: Credit Card Spending y/y

USD: CPI m/m, Unemployment Claims, Flash Manufacturing PMI, Philly Fed Manufacturing Index, Existing Home Sales