Plenty of noise, little movement

3 minute read


It was a dull day for the USD and ultimately an unproductive one. With the States officially on holiday there were no economic statistics to provide guidance. The Fed's "Beige Book", which is produced as an aid to the Federal Open Market Committee, showed growth in most of the bank's 12 districts but in four of them that growth was slower than before. The biggest problem across the board appeared to be the recruitment and retention of skilled workers. Fed vice chairman Randal Quarles, speaking at a banking symposium, went some way to reassuring investors that the upward trek of interest rates is not about to come to a halt. 


There were thin pickings from the euro zone economic data this morning.  German factory orders were down by 0.3% October, a second consecutive month of decline, and Germany's construction sector purchasing managers' index firmed up by a point and a half to 51.3. That lack of stimulus did not mean a quiet day for the EUR. It only covered a half-cent range against the USD but it covered it more than once, with some vigor. The net result was to leave the EUR flat against the USD and almost unchanged against the GBP.


An unhappy day for the CAD took it 1.1% lower against the USD. A large chunk of that loss was the result of a general risk-off mood among investors, which affected the other commodity-related currencies too. The specific handicap to the CAD was the Bank of Canada's monetary policy statement. As expected, the BoC kept its target for the overnight rate unchanged at 1.75%, but investors were taken aback by the language of the statement. Even though the bank believes interest rates "will need to rise into a neutral range to achieve the inflation target", it gave the impression that is not in a burning hurry to see that happening. 


After three government defeats on Tuesday, the House of Commons was in a far more civilised mood yesterday. The Brexit debate carried on, as it will until next Tuesday's vote, but the big hitters were not in attendance and the chamber was far from crowded. Away from Westminster, the talk was of Tuesday's amendment, which will give greater power to Parliament on Brexit decisions. It does not guarantee that there won't be a no-deal divorce with Europe but it does make one much less likely. That optimism overwrote any disappointment that investors might have felt at the disappointing UK services sector PMI, which was barely positive at 50.4. The GBP was unchanged against the USD.


The JPY managed to strengthen against the USD but only by 0.3%. Its trajectory was almost a mirror image of the DJ30 stock index. As share prices headed lower the JPY went up.  Japanese economic data were typically scarce: Japanese investors bought a net ¥1053bn of foreign bonds in the last week of November while foreigners put ¥733bn into Japanese bonds. The equivalent numbers for equity investments were ¥75bn  and ¥138bn.

Sign up for a free account

Sign up for a free account

Access our convenient and secure online platform to process your international payments. Manage beneficiaries and view payment status and history at the click of a button.

Find out more
FX business solutions

FX business solutions

We provide tailored services to help companies make international payments and manage their foreign exchange risk

Find out more