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Market Participants focus on Central Bank policy meetings

USD - United States Dollar

The Greenback fell against many currencies on Monday, slipping further from a 23-month high. The Dollar Index, which measures the US dollar vs.currencies, has also fallen to 97.55 - down 0.30%. This is ahead of the most important market news of the week, the Federal Reserve’s rate decision, announced tomorrow at 2pm. All eyes this week are focused on the US Central Bank’s policy-making board meeting, which starts today, and finishes tomorrow with a rate decision. It is widely expected the FOMC will remain dovish on policy normalization through 2019.

Crude oil prices have moved 1.4% higher overnight after Saudi Arabia’s oil minister answered Trumps call to up production. The minister said the kingdom is committed, alongside its OPEC members and partners, to reduce inventories. Of interest to market participants is the timing of an IMF report that Saudi Arabia needs oil prices at 85 dollars a barrel to balance its budget this year. West Texas Intermediate trades 1.6% higher this morning at 64.60 dollars per barrel.

Key Movers

For the past two years, Brexit has been the agenda; and more often than not, the main driver for the Sterling. The most significant impact was felt at the end of 2018 and the first quarter of 2019. The lack of news for the past two weeks has left many scratching their heads, and it almost feels like the calm before the storm. The mute button has well and truly been pressed, for now at least. Telegraph deputy political editor Steven Swinford reported yesterday that Brexit is officially dead for this week. Its been taken off the government’s agenda and replaced by Northern Irish business. The Guardian reported that talks between the Tories and the opposition Labour party are towards a possible compromise. This could perhaps place a lot more focus on the Bank of England's rate decision. The BOE is not seen to be shifting on their policy until Brexit is resolved. On Thursday, Governor Mark Carney could surprise to the upside by delivering a hawkish statement, as other areas of the UK economy are registering some pretty strong fundamentals that cannot be ruled out. Much of the Pounds downside risk and uncertainty has been around the UK’s departure from the EU, but in the interim, it can be seen as a positive and may well be what is keeping Sterling well supported during the uncertain times.

Expected Ranges

USD/EUR: 1.1175 - 1.1235 ▲

GBP/USD: 1.2926 - 1.3057 ▲

USD/CAD: 1.3419 - 1.3480 ▼

AUD/USD: 0.7030 - 0.7069 ▼

NZD/USD: 0.6654 - 0.6682 ▼