IFX Market Report: Friday 12th July 2019

The dollar fell to one-week lows on Thursday after Federal Reserve Chairman Jerome Powell continued his statement to Congress, in which he reinforced expectations of an interest-rate cut. The dollar index fell 0.1% in the morning and has fallen 1.6% since May. The positive data regarding jobless claims and inflation was not enough to dispel the effects of an interest rate cut later this month.

Although rumours of 0.5% rate-cut have largely been put to bed, even a 0.25% cut would not be the end of the conversation and further drops may come into consideration depending on how the economy reacts. This will lead to subsequent pressure on the dollar.

The euro was largely unchanged against the dollar as expectations of loosening monetary policy remained in place. Investors are focused on the European Central Bank minutes from June which will indicate whether discussions regarding asset purchases have started.

EURUSD opened at 1.1274 and fell in the early afternoon to stabilise around 1.1253 at the close of session

The pound rose slightly yesterday morning back above $1.25 but it remains down for the week. Sterling continues to feel the pressure of a fast-approaching Brexit deadline and the general economic gloom which also affects its major rivals. Bank of England Governor Mark Carney has said that UK exporters to the EU have shown a “mixed” level of preparedness for a no deal Brexit.

GBPUSD opened at 1.2535 and reached a midday high of 1.2565 before falling sharply in the afternoon to close at 1.2515

GBPEUR opened at 1.1119 and rose sharply in the morning, reaching an early afternoon high of 1.1149 before erasing most of these gains again to close almost where it started at 1.1122

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