Rates steady in run up to today's inflation report hearings

United States Dollar:

The dollar weakened yesterday despite a lack of top tier data. Flash services PMI printed slightly weaker than expected but it wasn’t a big contributor to the move. During what has been a steady start to the week so far, GBP/USD has made mild gains, trading to a high of 1.5712 yesterday evening. In an interview with the BBC, the Bank of England’s Andy Haldane said that “it may be telling us that rates in future may be materially lower than they have been in the past, because growth is soggier than it has been in the past”. However, his comments failed to have too much of a negative impact on the pound. It’s a big day today for the pound with inflation report hearings due at 10am. Carney et al will be testifying before Parliament on inflation and the economic outlook. Later in the day, US prelim GDP data is due with most economists expecting q/q growth of 3.3%.

Euro:

EUR/USD has made solid gains during the last 24 hours. It was boosted early on Monday morning following the release of stronger than expected German Ifo business climate index, coming in at 104.7 vs. forecasts for 103.0. This was the first rise in seven months, beating German ZEW data last week. EUR/USD traded to a high of 1.2444, after starting the week just below the 1.24 figure. Meanwhile yesterday, the Bundesbank’s Jens Weidmann said that the ECB could face legal limits in any government bond buying scheme, although it didn’t put much of a dent in the euro’s gradual rise vs. the dollar on Monday. The pair remains relatively well supported this morning at 1.2430 but it’s slightly weaker against the pound - GBP/EUR trades at 1.2615 currently.

Aussie and Kiwi Dollars:

Commodity currencies have suffered again since the start of the week. The aussie has lost about 140 points vs. the dollar whilst the kiwi has dropped 100 points. Softer commodity prices are heaping pressure on both currencies and the RBA’s Deputy Governor Lowe has been on the wires in the last half an hour. He’s continuing to jaw-bone the currency lower, although he has said that the recent fall has been helpful. AUD/USD opens in London at .8535 (four year lows) and NZD/USD trades at .7785.

Data releases for the next 24 hours:

AUD: Construction Work Done q/q

EUR: No data

GBP: BBA Mortgage Approvals, Inflation Report Hearings

NZD: No data

USD: Prelim GDP q/q, HPI m/m, S&P/CS Composite-20 HPI y/y, CB Consumer Confidence, Richmond Manufacturing Index