The British Pound gained versus the Dollar, despite the release on Wednesday of the BOE minutes, which revealed that policy makers were divided on providing forward guidance over the likelihood of a hike in interest rates. The Canadian Dollar slipped against its American counterpart.
BOE May Increase Benchmark Interest Rates
The British Pound strengthened against the U.S. Dollar, though its gains were capped by comments from Policy Committee member Martin Weale, who stated that stronger measures may be needed in order to make certain that keeping interest rates low would not cause inflation to surge. Meanwhile, British government bonds slipped for a fourth week on signs that the U.K.’s economic momentum may prompt the Bank of England to increase benchmark interest rates sooner than anticipated. However, the bank’s new governor, Mark Carney, has vowed to keep the rates at record lows until the level of unemployment reaches 7%, which he doesn’t predict will take place until at least the latter part of 2016.
Canadian Manufacturing Slips
In North American, the Canadian Dollar depreciated against its U.S. peer subsequent to a release which confirmed that manufacturing sales slipped in June, adding to worries that the country’s economy has slowed down. According to the nation’s statistics office in Ottawa, factory output dropped 0.5% while manufacturing has slipped 3.7% over the course of 2013. This was the third monthly drop in factory sales prompted by the recession in the Euro region. The Loonie plunged against most other Forex majors after positive data out of the U.S. showed that housing starts rose in July, and productivity climbed during the months between April and June, fueling speculation that the Federal Reserve may begin cutting back on monthly asset purchases.
Aussie Strengthens Against The Greenback
In other Forex news, the Australian Dollar concluded Friday’s trading session by gaining versus the greenback amid uncertainty over the future path of monetary policy in the United States. Reports from the University of Michigan on consumer sentiment revealed a decline from a six-year high, bolstering doubts about how the U.S. central bank may proceed. In the coming days, market investors will pay close attention to economic developments out of China relating to manufacturing and service sector activity in order to gauge how the Aussie will perform. New Zealand’s Dollar reached a nine-week high against the greenback but the currency lost some momentum as trading was interrupted by a mild earthquake. Luckily no damages were reported. Domestic releases indicated that retail sales went up 1.7% in the second quarter of 2013. Lastly, The Yen depreciated against the greenback at the end of last week’s trading session, thereby erasing prior gains brought on by solid metrics which indicated that Japan’s economy expanded, but at a slower pace than anticipated.