The US dollar once again managed to assert its dominance on Tuesday after a poor performance for other major global currencies.
The greenback saw a rise over the course of the day yesterday, reaching 96.02. It is edging closer and closer towards its most recent high of 96.15, which it reached two weeks ago today.
The main loser was the British pound. UK Prime Minister Theresa May is embroiled in a battle with European Union leaders over the terms of the country’s departure from the bloc.
On Monday, she claimed that the thrust of the deal was already completed, but that leaders still cannot agree on the issue of the Irish border.
When Britain leaves the EU, Northern Ireland will go with it while the Republic remains. However, the UK is keen to avoid a return to the days of border problems in an area which is sensitive on political, cultural and religious grounds.
As a result of the turmoil, the value of the pound dropped by 0.83% in the GBP/USD pair over the course of the day, which is its highest percentage-based drop since mid-September. It was trading at around $1.2965.
Once today’s forex market events are over, there is still plenty to look forward to across the rest of the week.
US housing market data will dominate the earlier part of the day. MBA mortgage application data will come out first at 11am GMT, and this will be followed by housing price index information for August at 1pm GMT. This is expected to show a month on month change from 0.2% to 0.3%.
Tomorrow’s interest rate decision by the Bank of Canada is scheduled for 2pm GMT. The central bank is expected to raise interest rates from 1.5% to 1.75% when it meets.
Into Thursday, the European Central Bank is widely expected to be ready to hold both interest rates and deposit rates constant when it meets at 11.45am GMT. Deposit rates are due to stick at -0.4%, while interest rates are expected to stay at 0%.
More US data will be out later in the day, including information on jobless claims at 12.30pm GMT. Initial jobless claims for the week are expected to rise somewhat from 210,000 to 213,000, while continuing jobless claims are predicted to also rise from 1.64 million to 1.66 million.
This sort of data could spook the dollar markets, as it is the kind of development used by the Federal Reserve to assess the health of the American economy when deciding on potential interest rate rises.
Friday, meanwhile, will see more important American data including gross domestic product rates annualised for the third quarter. These are out at 12.30pm GMT and are expected to show a significant drop from 4.2% to 3.3%.
The President of the European Central Bank, Mario Draghi, will speak at 2pm GMT on Friday and is likely to refer to the reasons behind the rate decision of earlier in the week. At 2.15pm GMT, his colleague, Benoît Cœuré, will also speak.