All quiet before Federal Reserve Wednesday | Smart Daily Currency Note

Sterling

A steady day for sterling yesterday, trading in a tight range against both the US dollar and euro as markets look ahead to today’s inflation figures. We anticipate an increase of 0.2% on last month's figure of 2.6% which means that it still way ahead of the Bank of England's 2.0% inflation target. The Governor and Members of the monetary policy committee will give evidence afterwards on inflation, interest rates and the economic outlook. The hearing lasts a few hours, so can create great volatility over that period of time. Call your trader today to find out which way rates are moving.

Euro

Euro trended in a narrow range yesterday against the USD and GBP, with little news out of Europe along with traders being cautious leading up to the Federal Open Market Committee projections and statement on Wednesday. Europe's trade surplus did narrow to €16.1 billion from €18.1 billion in March which was positive but the German Bundesbank did warn that signals showing a slowdown in growth in Europe are appearing.  Amidst this struggle for a return to growth, the European Central Bank (ECB) may be pressured to adopt more outlandish measures over the coming months. For example, we may see an increasing number of bank officials support a negative interest rate policy. Today all eyes will be on the ECBs President Draghi's speech along with German Economic Sentiment data. Throughout yesterday and today we have the G8 meetings taking place in the UK. Get in touch for the latest updates.

US dollar

Yesterday was a relatively quiet day for the US dollar as it traded within a narrow range against the euro and sterling. New York manufacturing data revealed conditions to be much more favourable than expected; although this had little impact on dollar performance as trading is likely to be more heavily influenced by events later in the week. Monthly figures illustrating the number of new building permits granted in the previous month are released today, giving an insight into future construction output. Furthermore, the monthly consumer price index, which gives an indication of inflation levels, is also released today and may prove to have an impact on trading ahead of the all-important Federal Open Market Committee (FOMC) statement which is due to be released on Wednesday. Call your trader now to see how markets react to the data released today and to get a live quote.

Worldwide

Yesterday we saw the Japanese yen drop against the majority of its 16 major peers. The slide was a response to stocks across the world performing well, triggering a sell-off from the safe-haven currency as traders looked to buy in to higher-risk, higher-yield markets. Similarly, we saw the Australian dollar, a high-risk currency, gain against all but one of its 16 main trading partners for the same reasons. The Canadian dollar had a strong day, trading at a one-month high versus its US counterpart amid significantly better-than-forecast Canadian bond-buying data. The data, which shows the number of bonds bought from overseas markets, is directly linked to currency demands. Today we see the release of monetary policy meeting minutes released by the Reserve Bank of Australia, as well as quarterly foreign trade data out of New Zealand. Eyes will also be on Northern Ireland for the G-8 meetings, which continue today. Get in touch for the latest rates.