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Sterling Bounces Up on BoE Haldane’s Comments; Dollar Flat; WTI Oil Gains on EIA

In another relatively quiet European session in terms of economic releases and in similar fashion to yesterday, forex market participants mainly reacted to comments by central banking figures, namely the hawkish remarks by a Bank of England policymaker which helped the pound bounce higher. In terms of the few releases during the day, those that attracted most attention were existing home sales data and the Energy Information Administration’s weekly report on crude stockpiles out of the US.

Sterling received a significant boost today after Andy Haldane, a Bank of England Monetary Policy Committee member, said he expected to support an interest rate rise in the second half of the year. Haldane’s comments stand in contrast to BoE Governor Carney’s dovish speech yesterday and are more significant in sight of the fact that he has generally been perceived as adopting a dovish approach. The pound surged on the news relative to the dollar and the euro and looks set to finish the day higher, recovering a significant portion of yesterday’s losses versus the two currencies. At its highest pound/dollar exceeded the 1.27 handle, while earlier in the day it fell to a fresh two-month low of 1.2588. Euro/pound was last eyeing the 0.88 mark. The pair opened at 0.8816.

In other UK-related news, it is important to note that ahead of Brexit negotiations Prime Minister Theresa May has yet to secure a functioning parliamentary coalition with Northern Ireland’s Democratic Unionist Party (DUP). If May’s Conservative party and the DUP fail to strike a deal, this is likely to create additional political uncertainty and consequently volatility for the pound.

Turning to today’s economic releases, US existing home sales for the month of May surprised to the upside by growing by 1.1% relative to the previous month to reach 5.62 million units. The figure represents the third highest monthly level in a decade. Expectations were for a decline by 0.5%, while the figure favorably compares to April’s 2.5% fall as well. House inventory shortages led to the median home price rising to the all-time high of $252,800 during the month. Indicative of the high demand is the fact that homes were on the market for the shortest amount of time (27 days) since the National Association of Realtors began collecting such data in 2011. Dollar/yen posted some minor gains as the data hit the markets. Those were short-lived though.

Looking at the dollar index which gauges the greenback against the currencies of six major US trade partners, it was last close to where it started the day at 97.73, in proximity to yesterday’s one-month high of 97.87. Dollar/yen was last slightly up on the day at 111.59. Against the euro, the greenback was slightly down with euro/dollar trading at 1.1143 during afternoon European trading hours.

The Canadian dollar is suffering on the back of oil falling to multi-month lows, as Canada is a major oil exporter. Dollar/loonie is rising for the third straight day while it climbed above the 1.33 handle today. Last week it fell to the near four-month low of 1.3164.

Concluding with commodities, gold was last near the day’s open of $1242.59 an ounce. Should it finish the day lower, it would constitute the sixth consecutive day of declines for the precious metal. Turning to the Energy Information Administration’s (EIA) weekly report on crude oil inventories, it showed US stockpiles declining by 2.45 million barrels, more than the expected decline of 2.11m. As a result, WTI oil rose steeply. It was last trading at $43.64 a barrel, up three-tenths of a percent on the day. Brent crude was last up one-tenth of a percent, at $46.08 per barrel.

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