Pound Remains Near 3-Week Low As Geopolitics Dominate Market Attention
ICM Brokers | Jul 24, 2014 02:48AM ET
EUR/USD
The euro came off eight-month lows against the dollar on Wednesday and held steady after investors brushed off soft consumer sentiment data and kept a cautious eye on Ukraine. Earlier Wednesday, reports that two Ukrainian jet fighters were shot down over the rebel-held city of Donetsk only days after pro-Russian separatists allegedly shot down a Malaysian Airlines flight with a missile rattled nerves. Geopolitical concerns sparked fears that the fallout from the Ukraine conflict, which could include fresh sanctions slapped on Russia, will dampen global recovery, Europe's especially, which weakened the euro earlier.
GBP/USD
The pound trimmed losses against the U.S. dollar on Wednesday, but remained near three-week lows as events in Ukraine and the Gaza Strip continued to dominate investors' attention. Investors remained cautious after the European Union threatened Russia on Tuesday with harsher sanctions over Ukraine, while fighting in the Gaza Strip continued. Earlier Wednesday, the minutes of the Bank of England’s June meeting showed that the decision on whether to raise interest rates has become more balanced for some policymakers in recent months than earlier in the year. However, the minutes also said weakness in wage growth is becoming more “striking”, particularly given that the annual rate of inflation rose to 1.9% in June. Weak wage growth in the face of strong employment growth made it difficult to gauge the degree of slack in the labor market, the minutes said. The British Banker's Association reported that the number of new mortgages approved increased to 43,300 last month from May’s revised total of 41,900, just below forecasts of 43,400.
USD/JPY
Japanese businesses need different managers who are more willing to take risks as the country emerges from 15 years of deflation that hampered innovation, according to Takeshi Niinami, chairman of Lawson Inc. “Most CEOs were promoted because they are really good at cost-cutting, not doing business, something new,” Niinami said today at a Japan Society conference in New York. “Those people can’t manage in this kind of situation where you can find more business opportunities.” Niinami, 55, an economic adviser to Japanese Prime Minister Shinzo Abe, is on the Industrial Competitiveness Council of Japan and a member of the Tax Commission of the Government. He was previously the chief executive of Lawson, Japan’s second-biggest convenience store chain, and was named president of Suntory Holdings Ltd. this year. After 18 months in office, Abe has fired two of what he calls the three arrows of Abenomics -- fiscal stimulus and unprecedented monetary easing -- in a bid to banish deflation from the world’s third-largest economy.
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USD/CAD
The U.S. dollar fell to session lows against the Canadian dollar on Wednesday after data showed that Canadian retail sales rose at a faster than expected rate in May. Core retail sales, which strip out automobile sales, rose 0.1% in May, falling short of expectations for a 0.3% increase and slowing from an upwardly revised 0.8% in April. The Canadian’s dollar’s gains were held in check as demand for the greenback continued to be underpinned by expectations that U.S. interest rates may rise sooner than expected. Data on Tuesday showing that U.S. inflation rose 0.3% in June, in line with forecasts, added to the view that the economy is improving.
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