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The Pound was little moved by yesterday’s Bank of England policy decision but tumbled against the Euro after the European Central Bank’s meeting. The BOE chose to maintain interest rates at the record low level of 0.5% and maintain its quantitative easing programme at £375 billion. Both decisions had been expected by economists. The ECB’s decision not to introduce new stimulus measures bolstered the single currency to come close to a three-week high. With no domestic data due for release today the Pound will be at the mercy of international factors such as the jobs data out of the United States.
The US Dollar fell against most major peers after the European Central Bank left monetary policy unchanged and sparked demand for the Euro and other higher-yielding currencies, while hit-or-miss data in the U.S. tarnished the ‘Greenback's’ appeal. The currency is likely to experience volatility later in the session due to the release of the anticipated nonfarm payrolls and unemployment rate data.
The Euro surged to a two-month high against the US Dollar and made gains against the majority of its most traded peers after the ECB said that it expects inflation to rise gradually. The comments dampened speculation that the Central Bank will introduce new monetary stimulus measures to tackle the threat of deflation.
The ‘Aussie’ softened slightly against a number of peers but remains close to a three-month high. The currency softened after Reserve Bank of Australia Governor Glenn Stevens said that the currency is ‘high by historical standards’. The currency surged yesterday on the back of solid retail sales data.
New Zealand Dollar
The New Zealand Dollar is on course to make a weekly high due to the revived investor demand for riskier assets as the crisis in Ukraine seems to have eased. The currency has rallied this week as tensions between Russia and Western democracies eased after Russian President Vladimir Putin backed off threats to immediately annex the Crimean Peninsula. The currency could push higher if this afternoon’s US jobs data comes in below forecasts.
The Canadian Dollar reached a two-week high against its US counterpart after data showed that the number of issued building permits increased more-than-forecast. The currency also remained supported from the Bank of Canada’s decision to maintain interest rates. The bank’s policy statement made no mention of the currency and said that the latest data on economic growth was better-than-expected.
South African Rand
The Rand remained close to the two-month high it reached against the US Dollar yesterday as investors await the release of US jobs data due for release later in the session. Trade is expected to be nervy ahead of the data release as a weaker-than-expected figure could send the Rand higher.