FX market outlook
Posted on Monday, February 27 2017 at 8:48 am GMT+0000Dollar lacks momentum ahead of Trump speech; Pound falls on Scottish referendum talk.
Sterling was the worst performing major currency in the Asian session today on reports of a possible Scottish independence vote. The dollar lacked momentum ahead of a raft of US economic data and speeches by President Donald Trump and Federal Reserve Chair Janet Yellen this week.
The pound dipped as much as 0.6 percent against the dollar to touch a session low of 1.2390 after a Times newspaper report said UK Prime Minister Theresa May could agree to a new referendum vote for Scotland. It would be under the condition that it is held after the UK leaves the European Union.
The euro was steady against the dollar to trade around 1.0560. The single currency remains under pressure over concerns about France’s upcoming election.
The Australian dollar rose against its US counterpart to reach a session high of 0.7707 after data showed company profits rose in the December quarter by the most since 2001.
The US dollar lacked momentum and was overall little changed against the yen during the Asian session as investors were cautious ahead of key risk events this week.
The greenback dipped briefly below the key 112-yen level to touch a 2-week low of 111.91 and was capped below 112.30. It will be a busy week for US data, beginning with durable goods orders, building permits and pending home sales today. FOMC Member Rob Kaplan is due to speak later in the day.
The key event will be US President Donald Trump’s address to Congress on Tuesday. Investors await more clues on spending plans and tax cuts. There is a risk for Trump’s speech to disappoint and this would be negative for the dollar.
Another important event for the markets this week will be Fed Chair Janet Yellen’s speech on the economic outlook. Markets will look for more guidance regarding a March rate hike.
In commodities, oil prices were recovering in Asia after a drop of more than 1 percent on Friday. WTI oil held above $54 a barrel today while Brent rose 0.7 percent to hit $56.73 a barrel.
Gold held on to most of Friday’s gains and consolidated around $1,256.80 an ounce.
