Sterling slides after Carney comments

USD

The greenback started the week with a strong start verses its contemporaries with traders waiting for the Federal Open Market Committee (FOMC) decision tomorrow. Against the yen, the dollar hit an eight-week high on Tuesday as U.S. central bank policymakers meet to discuss further monetary tightening, with renewed calm over North Korea easing demand for perceived safe havens like the Japanese currency. In a speech scheduled for 1430 GMT on Tuesday, U.S. President Donald Trump will urge United Nations member states to increase pressure on North Korea to give up its nuclear weapons.

Housing starts, US building permits, the current account balance and import prices are due for release later today.

GBP

Sterling slipped against the dollar on Tuesday, kept under pressure after a nearly 1 percent slide on comments from Bank of England governor Mark Carney, who said interest rates rises in coming months would be limited and gradual. The pound rose as much as 3.3 percent last week, jumping more than four cents to $1.3618 on the back of hawkish messages from the BoE and Gertjan Vlieghe, one of the Bank’s rate-setters normally considered a dove.  But it slid from its highest level since the Brexit result after Carney’s comments on Monday, which some analysts said were aimed at managing market expectations of the pace and number of rates hikes from the British central bank. There are no major reports due from the UK for now so bulls might take a bit of a pause. 

EUR

The common currency began the week positive as it bounced against most of its contemporaries when final CPI readings were unchanged. Both the core reading and the headline have indicated an increase in price levels over the four weeks, supporting European Central Bank tapering expectations towards the end of the year.

JPY

The Japanese currency was off to a slow start as risk appetite extended its stay on the lack of moves from North Korea so far. At the same time, traders are also likely adjusting their positions ahead of the Bank of Japan decision later this week. Japanese banks were closed for the holiday on Monday and there are no major reports due today. 

CHF

The Swiss currency dropped against the greenback but made a came back against some of its contemporaries as the Swiss National Bank simmered down its intervention threats. There were no reports out from the franc so far this week and none are due today so market sentiment or currency-specific action could push franc pairs around. 

Gold

Gold steadied above a two-week low on Tuesday, with investors awaiting direction from a Federal Reserve meeting for clues on the pace of monetary policy tightening in the United States. Spot gold was nearly unchanged at $1,307.28 per ounce, after dropping to $1304.10, its lowest level since Aug. 31 in the previous session.

Oil

Oil markets held largely steady on Tuesday, even as OPEC producers Saudi Arabia and Iraq pointed to a reduction in supplies in line with efforts to tighten the market and prop up prices. U.S. West Texas Intermediate (WTI) crude futures were at $50.01 per barrel, up 10 cents, or 0.2 percent, from their last settlement. Brent crude futures, the international benchmark for oil prices, were at $55.50 per barrel, up 2 cents from their last close.

The most important economic events:

• USD Housing Starts (GMT 12:30)

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.