The Pound remained on an upward trend and extended gains for a fourth week against the greenback as the likelihood for Q.E. expansion ebbed after the BOE’s governor, Mark Carney, said he saw no need to continue with the asset purchases.
Q.E. Only If Economy Slows
The Sterling strengthened versus the majority of its most traded online Forex counterparts after the Bank of England’s governor, Mark Carney, reiterated that further asset purchases may only come into place if the economy begins to slow down. Meanwhile, Friday’s economic reports showed that confidence among consumers rose to the highest level in six years while U.K. home prices climbed. The Sterling surpassed the $1.6100 level and it may continue to go up further once the Debt Management Office auctions 4 billion Pounds of 10-year government bonds in the coming week. It’s also anticipated to continue its rally if today’s figures confirm that manufacturing expanded in the month of September.
Canada’s Dollar affected By Budget Talks
In other Forex news, reports showed that the Canadian Dollar fluctuated within a very tight range on worries over a lack of progress regarding U.S. budget negotiations. Economists are of the opinion that failure to reach consensus may have a negative effect on the world’s biggest economy, and therefore, on Canada’s exports. According to sources, the situation in the U.S. appears to be worsening, especially after Republican lawmakers indicated that they oppose the idea of withdrawing funding from the Obama Health Care Program in order to keep the government from shutting down.
Time Running Out For Congress
The U.S. Dollar plunged against most of the foreign currency majors as market investors shied away from the greenback. This happened as the deadline to come up with a spending package which will ensure the government is able to stay open at least until the middle of December draws near. While investors anticipate that Congress will produce a deal in the eleventh hour, much uncertainty still remains. Democrats in the Senate agreed on a “stop-gap” bill that will allow the Federal government to operate until mid-November. The bill is set to go back to the House of Representatives, where Republicans have advocated withdrawing funding from President Obama’s Healthcare program. The greenback remained weak after the consumer sentiment index from the Thomson Reuters/University of Michigan revealed a drop in September. Other releases confirmed that personal income only went up 0.4% while core personal consumption climbed 0.2%, dampening expectations for a reduction in monetary easing.