UK PM Theresa May sends the British Pound in Free Fall
The British Pound suffered a quick depreciation on the second trading day of the week. The catalyst for the sunned GBP/USD sell off was the UK Prime Minister Theresa May speech delivered at the launch of the Taylor report. During the speech the UK PM May admitted that she might not be able to deliver on all of the campaign promises as she need support from other parties. This has been interpreted very negatively by the markets.
Better UK Unemployment Figures Helps the Pound Recover Early Losses
On Wednesday the UK labor market figures have helped the British Pound recover from the previous sell off. The Claimant Count Changes dropped by 6k versus 10k the market consensus while the Unemployment rate dropped to multi decades low. The market forecasts saw a flat reading of 4.6%, but the actual number came in much better dropping to 4.5%, the lowest level since 1975 which is a 42-year low. The positive tone has helped the GBP/USD trade at new week session high.
BOC Hike Rates from Historic Low, USD/CAD Tumbles
On Wednesday the BOC decided to raise the interest rates from the historic low level of 0.5% by a quarter of a point to 0.75%. This was widely anticipated by the markets as the USD/CAD tried to price in the rate hike weeks in advance. This was the first rate hike in 7 years, which give a positive tone to the Canadian Dollar. The USD/CAD exchange rate continued on its bearish path reaching 14-months low after it broke below 1.2700 levels.
China Exports Jumps on Higher Global Demand, Aussie Testing the Yearly High Level
The Chinese economy continued to expand based on the latest Import and Export figures. The imports were expected to increase by 13.1%, but they rose by 17.2% more than the market expectation. Higher global demand also boosted the Chinese exports, which rose by 11.3% versus 8.7% forecasted. The AUD/USD jumped higher after China showed higher June imports because China is one of the biggest Australian trade partners.
Fed Chair Yellen Dovish Tone Keeps US Dollar under Pressure
The Fed Chairman Yellen’s testimony in front of the US Congress has failed to boost the US Dollar. The lack of transparency in regard to the winding down the Fed’s balance sheet couple with dovish comments in regard to the future rate hikes has sent investors selling the US Dollar.