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FX round-up: Sterling little changed, Aussie and Loonie weaker

By Alexander Bueso

Date: Wednesday 06 Mar 2019

FX round-up: Sterling little changed, Aussie and Loonie weaker

(Sharecast News) - Sterling finished the session flat against the other majors, with traders apparently choosing to stay on the sidelines ahead of the two main risk events of the week: the European Central Bank's policy meeting on Thursday and US non-farm payrolls figures on Friday.
And then of course there was the risk around the ongoing US-China trade talks to contend with.

The pound did start the session on the back foot, with the Greenback seeing follow-through buying on the heels of the prior session's unexpectedly strong reading on the latest ISM services sector survey in the States.

Adding to the selling pressure on the British currency was negative market commentary around the likelihood that the Attorney General would be able to wrest concessions from Brussels concerning the Irish backstop.

Yet by the end of the trading day cable was 0.01% higher to 1.3179, albeit after hitting an intraday low of 1.3124 against the US dollar, while versus the euro it was off by 0.02% to 1.1652, having fallen as far as 1.1602 during the afternoon.

To take note of, late in the day BoE 'hawk' Michael Saunders told an audience at Imperial College that it was right for the central bank to "wait and see" how Brexit panned out, given that inflation remained "reasonably well contained".

Trading in euro/dollar was considerably more choppy although the end result was much the same, with the euro little changed versus the US dollar by the end of trading at 1.1310.

Nevertheless, a late afternoon report by Bloomberg that the ECB was set to slash its euro area GDP forecasts the next day, which in turn would justify another round of medium-term lending for the bloc's banks did see the single currency spike lower briefly to reach 1.1286.

There was also some volatility to be had in the Loonie after rate-setters in Ottawa left policy unchanged but sounded a 'dovish' note, proppeling USD/CAD up by 0.6% to 1.3430.

It was a similar story Down Under, with AUD/USD dropping 0.78% to 0.7029 after the country's statistics office reported slower than expected GDP growth for the fourth quarter.

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