Forex Flash: Greenback weaker with focus on international developments – Wells Fargo

Nick Bennenbroek, Head of Currency Strategy at Wells Fargo notes that most currencies are stronger against the greenback today with market focus firmly on international developments.

He notes that the Swedish krona jumped as that country’s central bank held rates steady and said it was comfortable with the level of the currency, the Norwegian krone is also firmer, and the Australian dollar gained on strong data. Further, he writes, “The euro was firm early on, but has reversed course after unsourced reports by a German newspaper said the ECB is concerned a strong currency could hurt the competitiveness of the Southern European countries. The yen is steady, reversing earlier intraday losses. In addition to firm Japanese data, the G7 statement on exchange rates has potentially removed some of the downside momentum from the Japanese currency.”

Bennenbroek notes that the only G10 currency to significantly under perform today is the pound, with markets more focused on the Bank of England soft GDP growth forecasts than the elevated CPI forecasts. He finishes by writing, “Although foreign currencies are up today, those moves are somewhat lacking in conviction, with markets still in something of a waiting mode ahead of this weekend’s G20 meeting of financial officials. Further foreign currency gains are possible, though perhaps not until after and depending on the outcome of that meeting.”