- U.S. banks closed for Martin Luther King Day
- BOE Governor Carney: U.K. investment slowed down on uncertainty
- Carney: U.K. growth still supported by consumption but growth could slow
Dollar pairs held on to their ranges as U.S. markets were closed for the holiday while sterling is feeling the jitters ahead of U.K. Prime Minister May’s speech.
BOE Governor Carney’s testimony – In the absence of top-tier economic releases during the U.S. session, all eyes and ears were on BOE head honcho Carney’s testimony, wherein he discussed his assessment and outlook for the U.K. economy.
According to Carney, U.K. growth is currently supported by consumption as households appear to be keeping calm and carrying on with their purchases despite Brexit concerns. However, this type of consumption-led growth tends to be slower and the rise in price levels could weigh on demand. He did say that the BOE has limited tolerance for faster inflation but is willing to accept above-target CPI with limits.
In response to questions on how Brexit can impact sterling, Carney answered that the value of the pound can go up or down in the next few years. He also added that investment in the U.K. has lagged due to the uncertainty that the negotiation process poses.
Major Market Movers:
GBP – The pound was still the weakest of the bunch since traders are starting to price in expectations of “hard Brexit” statements during PM May’s speech. Here’s what Forex Gump is expecting.
GBP/USD pulled up to 1.2080 but eventually retreated to a low of 1.2017, GBP/JPY fell from a high of 137.84 to a low of 137.12, EUR/GBP tried to fill the weekend gap but popped right back up to .8817, and GBP/AUD resumed its slide upon finding resistance around 1.6165.
- 12:30 am GMT: Australia home loans (+0.1% expected, -0.6% previous)
- 12:30 am GMT: Australia new motor vehicle sales (-0.7% previous)
- 4:30 am GMT: Japanese revised industrial production (no changes to 1.5% expected)
Head on to Big Pippin’s Daily Chart Art for some pip-locking technical setups!