Dollar tips south after early equities rebound

Canadian dollar – The Canadian dollar failed to take advantage of a rebound for risk appetite given the expected data outcome in this week’s economic data pipeline. Weakness in the U.S. economy continues to frustrate the ambitions of the loonie given the close trading relationship between the two economies. Crude oil prices remain weak on Monday, excluded from any risk rebound and partially behind a muted gain for the local dollar, which advanced to $1.0226 U.S. cents.

British pound –The Bank of England in today’s Quarterly Bulletin referred to inflation as being “reasonably well anchored,” despite its ugly performance relative to other leading nations. At 4.5% the pace of increase in consumer prices is twice that of the continent although as the Bank claims, the runaway is explained by sales tax increases and energy inflation. The pound has recently suffered as investors have slowly come around to an understanding that the central bank was winning the media war over the need to tighten monetary policy. The pound took advantage of the European policy spat over Greece and rose for a fourth day versus the single currency rising to 88.13 pence. Against the dollar the pound rose to $1.6324.

Aussie dollar –The Aussie rallied despite a shortfall in new loans advanced by Chinese lenders. While that could be a sign that the authorities face less need to restrain activity in the world’s second largest nation the Aussie rebounded from a nearly three-week low to trade at $1.0568. Despite a recent softening in expectations surrounding the need by the RBA to keep tightening its monetary stance, the Aussie remains relatively well supported by the fact that at 4.75% it carries the highest yield among developed nations.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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