FX round-up: Listless sterling suffers amid Independence Day malaise

FX round-up: Listless sterling suffers amid Independence Day malaise

Tue, 04 July 2017
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FX round-up: Listless sterling suffers amid Independence Day malaise

(ShareCast News) - Sterling spent Tuesday essentially listless thanks to the US Independence Day holiday casting a pall of malaise over global financial markets.
At 17:26 BST, sterling was down 0.16% to $1.2919, and down 0.04% to €1.1386. It gained on the aussie, but fell on the loonie, kiwi, rand and yen.

"The GBP/USD edged lower today as the US dollar is the preference of dealers at the moment," said David Madden, market analyst at CMC Markets UK.

This was as geopolitical tensions rose after North Korea alleged it had successfully test-launched a long-range intercontinental ballistic missile, which could potentially reach the US.

On the data front, today's UK construction purchasing-managers' index (PMI) disappointed, but attentions were already on the country's services PMI on Wednesday.

The country is in shaky economic territory with sterling a shadow of its former proud self, with economic indicators underwhelming and key Bank of England players appearing more hawkish.

"The report (construction PMI) didn't have a huge impact on the performance of the pound, but when you take into account the slowing growth rate of British manufacturing from yesterday, it weighs on sterling's prospects," said Madden.

"Bank of England members, Mark Carney and Andy Haldane made hawkish statements last week, but the economic announcements would need to be firmer before action should be taken."

Meanwhile, the dollar-spot index was up 0.04% to $96.255, with the greenback making ground on the euro, aussie, kiwi and rand, but falling on the loonie and yen.

The dollar was up 0.16% to €0.8814, with Madden commenting profit taking was hurting the euro.

"Eurozone producer price index (PPI) for May was -0.4% on the month and rose by 3.3% on the year, while the market was expecting -0.2% and 3.5% respectively," he said.

"This caused additional problems for the euro."

Finally, FXTM research analyst Lukman Otunuga said Japan's yen appreciated against its major counterparts during early trading on Tuesday amid risk aversion.

He noted that investors were adopting a cautious approach following reports of North Korea conducting a long-range missile test.

"In times of uncertainty and trouble, the yen remains a trader's best friend and this was illustrated today when the currency gained ground against the US Dollar.

"From a technical standpoint, the USDJPY has found some resistance at 113.50. A failure of bulls to secure control above this level could open a path lower back towards 111.60."

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