Article / 11 October 2016 at 21:58 GMT

US Market Wrap: Pound pounded by proselytistic pronouncements

FX Trade Strategist /


  • Australia: Westpac Consumer Confidence    2330 GMT 

US data released

  • Nothing of note 

Sterling got hammered again today and this time neither a fat-finger nor errant algorithm were to blame. The goat horns are planted firmly on the head of newbie Bank of England Monetary Policy Committee member, Michael Saunders. 

The rookie MPC member had failed to read the “Do not talk about the currency” section in the “New Central Bankers” guidebook, when he spoke to the UK Treasury Select Committee. Saunders warned about the UK’s rising current account deficit and its impact on GBPUSD when he said: “Given the scale and persistence of the UK’s current account deficit, I would not be surprised if sterling falls further, but I am fairly agnostic as to whether any further depreciation is likely.”

The pound got pounded. GBPUSD dropped to 1.2088 from 1.2327 before rebounding modestly to close at 1.2145.

That set the tone for the rest of the G10 currencies. EURUSD is probing support in the 1.1050-60 zone. USDJPY’s failure to extend gains above resistance in the 104.00-20 has shifted the focus back to support in the 102.60-80 area.

The commodity currency bloc is under pressure as oil prices have drifted lower and in the Kiwi’s case because of additional easing concerns.

The oil rally paused. WTI touched $51.49 in New York and then headed lower until mid-afternoon despite reports that Opec members are working feverishly in Istanbul to hammer out details for a production cap agreement. 

The price drop was due, in part, because the International Energy Agency reported Opec had boosted its crude production by 160,000 barrels/day to 33.64 million b/d in September. WTI finished the day at $50.81.

Rate hike fever (or at least rate hike sniffles) and a weak start to Q3 earnings reports helped drive US equities into the red. Samsung’s woes may have added to the bearish sentiment after the electronics giant announced that it is discontinuing its recently released Galaxy Note 7. That news trimmed $17 billion of Samsung’s market value.

In US presidential race news, Donald Trump is in full feud mode with key members of the Republican party. He has declared himself “freed of the Republican shackles". Hillary Clinton just smiled and arranged for a moving company.

 The pound got pounded following comments from Bank of England MPC member
Michael Saunders. Photo: iStock


Countries running current account deficits may see the US dollar rally against their currencies writes Saxo Bank Chief Economist Steen Jakobsen in: Macro Digest: Why USD is about to move much higher — #SaxoStrats.

– Edited by Gayle Bryant

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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