DAILY FX WRAP: A quieter affair across FX markets today despite the noise from the OPEC/NonOPEC, GBP downside on the horizon with economic data continuing to soften
A quieter affair across FX markets today despite the noise from the OPEC/Non-OPEC, in which the cartel have agreed to extend output for 9-months under the current output conditions. However, given that this was in line with expectations (and announced yesterday by OPEC delegates), commodity linked currencies in particular CAD saw the mildest of gains to briefly break through 1.34 against the greenback. AUD fails to consolidate above 0.75 amid the slip in copper and iron ore.
USD-index saw a slight reprieve from yesterday’s Fed induced weakness, much of this seen through USD/JPY, which had found support at the 111.50 level. FOMC minutes last night highlighted that most officials would wait to see if Q1 weakness was transitory, although the release of today’s US data would fail to flatter, as the US reported that the trade deficit widened, while the claimant count rose. Subsequently, this prompted Goldman Sachs and Barclays to downgrade their Q2 GDP
Ahead of the UK election, the economic outlook continues to soften with Q1 GDP falling to 0.2% (below BoE forecast), consequently offsetting the firm business inventories data. Some suggest further falls for GBPUSD as risk grows for a break below Wednesday and Thursdays lows residing at 1.2927-40.