Posts belonging to Category France



Euro jumps on French election results

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

The pound spent much of last week holding multi-month highs against the major currencies but returned from the weekend in a generally softer position.

GBP/EUR dropped from €1.1948 to €1.1790, GBP/USD dipped from $1.2854 to $1.2777, GBP/AUD slumped from AU$1.6990 to AU$1.6897 and GBP/NZD eased slightly from NZ$1.8292 to NZ$1.8177.

GBP/EUR dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

After surging on the back of optimism surrounding the UK’s snap general election, demand for the pound eased slightly on Friday following a less-than-impressive domestic retail sales report.

The data showed an unexpectedly steep slump in consumer spending in March, and some believe this heralds the beginning of the general Brexit-inspired economic slowdown predicted before the referendum.

Although pound losses were limited by hints from a Bank of England (BoE) policymaker about his plans to vote for higher borrowing costs in the near future, GBP exchange rates were left down on the week’s best levels.

GBP/EUR then dropped by over 1% on Monday as the euro soared in response to the outcome of the first round of the French Presidential election.

With centrist Emmanuel Macron and far-right Marine Le Pen making it through to the second round, and Macron expected to triumph in the second vote, the odds of France exiting the EU fell significantly. The euro jumped by over 1% against the pound, US dollar, New Zealand dollar and Swiss franc on the news.

 

Wise Money market data coming up

Today’s economic calendar highlights are German IFO business surveys, UK Confederation of British Industry (CBI) reports and Canadian wholesale sales data.

The German IFO gauges of business climate and expectations are expected to show improvement in April, while the UK’s business optimism, trends total orders and trends selling price figures are all forecast to dip.

If these predictions prove accurate the pound could extend losses against the euro as trading continues.

As last week’s Canadian inflation data fell short of the mark (leaving the Canadian dollar broadly weaker) another disappointing domestic report may help the pound recoup some of today’s losses against the ‘Loonie’.

 

French election fears leave euro weaker, UK inflation ahead

After dipping at the tail end of last week, the pound spent Monday recovering losses.

After dipping at the tail end of last week, the pound spent Monday recovering losses.

The GBP/EUR exchange rate firmed from €1.1705 to €1.1738, GBP/USD climbed from $1.2388 to $1.2429 and GBP/NZD bounced back from NZ$1.7825 to NZ$1.7886.
GBP/AUD spent the day fluctuating between AU$1.6539 and AU$1.6583, but GBP/CAD closed Monday slightly lower as oil prices spiked.
The pound was able to start the week fairly strongly, recouping recent losses despite a report revealing a sharp decline in credit card spending. The data, which was published by Visa, showed that monthly spending patterns dipped in March.
However, while the report hinted at a slowdown in consumer activity, expectations that today’s UK Consumer Price Index will show that inflation remained above the Bank of England’s 2% target in March helped the pound advance. While growing price pressures and stagnant wage growth could restrain consumer spending, higher inflation might encourage the BoE to hike interest rates sooner than forecast, so a strong inflation result today could see the pound extend yesterday’s gains.

The rise in GBP/EUR was also the result of mounting fears about the French election. With two of the top three candidates having an anti-EU stance (far-left candidate Jean-Luc Melenchon has now taken third place), the euro is likely to remain under pressure as the first round of voting approaches.

Wise Money markets data coming up

While today’s UK inflation data is liable to be the main mover of pound exchange rates, news from the Eurozone could also have an impact on GBP/EUR.
ZEW research centre is set to publish its Economic Sentiment surveys for Germany and the Eurozone.
The German index is believed to have jumped from 12.8 to 14.8 in April, a result which could give the euro a boost.
If the Eurozone measure also shows an increase in confidence, and the German gauge of the current situation improves as anticipated, the euro may be able to limit the pound’s gains in the event of a stronger-than-anticipated UK CPI reading.
As it stands, UK inflation is expected to come in at 0.3% on the month (down from 0.7% MoM in February) and 2.3% on the year.
Core inflation is believed to have eased from 2.0% to 1.9%.
It would take an above-forecast result to really bolster BoE interest rate hike expectations, so the pound could spend the day drifting lower if inflation falls short.

Article 50 activation date sends pound lower

Although the pound began the week on a bit of a high, the currency experienced a prompt reversal of fortunes as the official date for the activation of Article 50 was announced.

Although the pound began the week on a bit of a high, the currency experienced a prompt reversal of fortunes as the official date for the activation of Article 50 was announced.

The news that Article 50 would be triggered on March 29th saw the GBP/EUR exchange rate fall from a high of  ‘1.1548 to a low of  ‘1.1476. GBP/USD also lost more than 0.3% to slide to 1.2333 while both the GBP/AUD and GBP/NZD exchange rates slumped by over 0.7%.

Wise Money Markets Roundup

Prime Minister Theresa May’s plans to activate Article 50 before the end of March have been hitting headlines for quite some time. As itís been on the horizon for a while, some industry experts had predicted that the impact of the event on the pound would be minimal. While that didn’t stop Sterling falling when the date was confirmed on Monday, the currency could recover its knee-jerk losses over the rest of the week.

Economic data was in pretty short supply on Monday, with the UK Rightmove House Price index coming in at 1.3% month-on-month and 2.3% year-on-year. German producer price data fell short of forecasts, but the report had little impact on the euro as investors instead focused on the results of the latest polls for the French election. Current forecasts put the odds of right-wing candidate Marine Le Pen winning the first round of the process at 26% (neck-and-neck with closest rival Emmanuel Macron).

Currency Forecast

Although Article 50 is likely to remain in the spotlight over the week ahead, this weekís UK inflation data and retail sales figures could help the pound return to its recent highs against peers like the euro, US dollar, Australian dollar and New Zealand dollar.

If today’s inflation data confirms that the annual Consumer Price Index pushed above the Bank of Englandís (BoE) 2% target in February, it would increase the pressure on the central bank to raise interest rates – potentially boosting the pound in the process.

Similarly, this week’s domestic retail sales numbers are expected to show a rise in year-on-year consumer spending and could lend the pound further support if the estimates prove accurate.

However, if either of these reports miss the mark, we may see the poundís decline continue in the build up to March 29th.

Other economic reports to focus on today include Canadaís retail sales data and Australiaís leading index.

UK immigration numbers fall

Immigration has seen a fall in the UK since the Brexit vote, as Europeans feel the UK will become more hostile moving forward.

Immigration has seen a fall in the UK since the Brexit vote, as Europeans feel the UK will become more hostile moving forward.

The figures, which were from September 2016 showing net migration had fallen year on year to 273K, which is still significantly above the Governments 100K marker.

The latest CBI survey has showed UK Retail sales have bounced back from its January blues, with consumer spending still not unconvincing shoppers to run from the threat of inflation. The survey, answered by retailers showed the strong improvement from a month previous, but fears are growing for when Article 50 will be triggered and inflation continuing to rise.

Potential Frexit

A potential Frexit is causing one of Franceís biggest insurers, Axa to rethink its strategy. With its shares down nearly 5% since the election, investors are now taking Le Pens National Front party seriously. The news that her rival has agreed a pact early this week will calm nerves, but another Brexit style move in France if Le Pen is successful is now seen as a real threat to some of Frances biggest companies.

US stock markets gather momentum

The US stock markets continue to gather momentum, since Donald Trump has promised more US jobs for locals, but he has cut short advising on a plan to halt the factory jobs decline. The US is looking steady as a safe haven currency, with a probable interest rate move being looked again over the next 2 to 3 FOMC meetings.

Data to come

Canadian Consumer Price Index figures are out for viewing today, alongside New Home Sales for the US, in what will be a less volatile day in trading.

UK economy increases 0.7%

The UK economy increased to 0.7% for Q4 of 2016, up from 0.6% the previous quarter.

The UK economy increased to 0.7% for Q4 of 2016, up from 0.6% the previous quarter.

The Gross Domestic Product figures were welcomed by investors, as the pound attempted a rally. The manufacturing industry was given the plaudits as it beat its own expectations, but the ONS slashed estimates for growth in 2016 to 1.8%, down from the 2% it had forecast in January. Exporters in the UK have grown in confidence, with no surprise to GBP levels against most major counterparties since Brexit, a survey announced. Sales of UK products are expected to grow in 2017 with 9% levels higher for Q4 2016, than the previous quarter.

EURUSD hit six week low

EURUSD currency pair hit a six week low touching 1.0537 early this morning as the French Presidential election begins to take shape. With Le Pen looking a strong candidate within France, a move from her rivals has since boosted the currency pair, as Macron agreed a pact against the populist National Front.

Another rate hike expected soon

The Federal Reserve has suggested another rate hike is expected ‘fairly soon’ if important economic data continues to prosper, notably jobs numbers and inflation. The minutes from the meeting, aired yesterday showed the Fed keeping interest rates on hold, and stressed uncertainty will keep rates on hold for the short term until the future becomes clearer. 10 of the members claimed ‘moderate risk’ to inflation fears, which was seen as the main cause to keep rates where they currently stand.

Today’s data comes from the EU and the US, with German Gross Domestic Product expected at 1.7% aligned with 1.7% forecast, with a German confidence survey to add. In the US, Initial jobless claims for the week and continuing claims are to be viewed also with US House Price purchase this afternoon.

UK inflation report and Central Banks’ speeches in focus

With the US markets being closed due to the bank holiday yesterday, volatility was fairly subdued for the Greenback.

With the US markets being closed due to the bank holiday yesterday, volatility was fairly subdued for the Greenback.

Though the US dollar has opened with some strength this morning as traders realign positions.

With Janet Yellen, in her testimony, taking a hawkish tone on the position of the Federal Reserve as an independent body, signals for the market continue to forecast a US interest rate hike in the near future, possibly March. Analysts also forecast the Greenback to be fairly strong right through 2017, basing their predictions on expected tax, fiscal and monetary policy changes.

News from Europe

EURUSD traded above the 1.06 mark yesterday though gains have been pulled back as the Euro takes a defensive approach as the French Election draws near. A poll showing the rising popularity of France’s right wing candidate, Marine Le Pen tested investorsí nerves as they moved into French Bonds leading the stock markets to falter.

Also, Greece needs a new bailout tranche by the third quarter of the year to repay the IMF and has asked for more time to negotiate an agreement on the austerity measures, as Greece has rejected the proposal to reform pensions. On the economic calendar from the Eurozone, French inflation, manufacturing and services data are due to be released, while the US calendar is made up of speeches by Fed Members Kashkari, Harker and Williams, coupled with Redbook numbers and manufacturing and services PMI data for further direction.

Sterling enjoys minimal gains

Sterling meanwhile did enjoy some gains against the Greenback amidst low volatility yesterday but the lack of confidence in the pound is very evident as it failed to consolidate any of those gains as US markets reopened. However, despite reports that consumer confidence is still rising after the Brexit vote and that the demand for British goods has risen to a two-year high the pound has barely managed to crawl out of the 1.25 level against the Greenback after last week’s negative UK retail sales data.

With most of the movement for Sterling dependent on the Article 50 trigger and negotiations on a Brexit deal, focus for the short term will be on Bank of England Governor, Mark Carney’s speech and the inflation report due out today as well as the public sector net borrowing numbers for January for further direction.

European Commission projects expansion for UK

The European Commission has projected an expansion of 1.5% for the UK after initially suggesting just a 1% growth, seemingly backing the pound for 2017.

The European Commission has projected an expansion of 1.5% for the UK after initially suggesting just a 1% growth, seemingly backing the pound for 2017.

 

After initial fears of Brexit causing harm to growth in the UK, they have appeared to have back tracked and now state ‘growth has yet to be affected’. 2016 ended up being positive in terms of expansion, showing that the UK was the fastest growing G7 nation. But expectations have been kept at a steady 1.2% growth for 2018. Key data out in the UK today, with Consumer Price Index expected to come in just shy of 2%, with previous figures moving to 1.6%. Consumers are slowly beginning to feel the force of inflation, which has slowly been on the rise since Q4 of 2016.

The Greek banking situation has made its way back into the press, as bailout issues arise again. The BoG Governor, Mr Stournaras has stated that Greece requires another urgent bailout. With the Greeks beating its fiscal target set by IMF officials, it would appear they could be in line for a quick fix, but would need to keep to the agreement set out previously.

Marine Le Pen likely to win first round of voting

In other news, Marine Le Pen is likely to win the first round of voting in France and she has not been shy in stating she wants France out of the EU, now commonly known as a potential ‘Frexit’. All eyes will be on the how the National Front party performs in the upcoming elections.

Focus on German GDP

Today the market will be focussing on German Gross Domestic Product (1.7% expected against 1.8% forecast) & Consumer Price Index (1.9% expected & forecast) plus Italian Gross Domestic Product (1% expected against 1% forecast) in the spotlight.

All eyes on Donald Trump

All eyes will be on Donald Trump over the next few weeks, after he stated he will be making a big announcement with regards to tax. The announcement had moved US indexes up suddenly, as investors await the breaking news. The end of the day sees Federal Reserve’s Janet Yellen speaking before a Senate Banking Panel, which could feed into market movements.

Busy week ahead for the US

Last week, we saw a fairly subdued market with a lack of important data as most releases of note were focussed on the commodity currency countries such as Canada and New Zealand.

 Last week, we saw a fairly subdued market with a lack of important data as most releases of note were focussed on the commodity currency countries such as Canada and New Zealand.

There were also no major developments regarding Brexit and political uncertainty within the US and Europe.

The week ahead is looking a lot busier, macro-schedule wise. Fed Chair Janet Yellen’s semi-annual testimony to Congress (Tuesday & Wednesday) will call for close attention, as sheís likely to be asked about any possible implications for the monetary policy of Trump’s fiscal stimulus. Furthermore, any hints that the Federal Reserve may have to revise its interest rate projections higher could provide a spot of strength/support to the dollar.

Looking back at the macroeconomics this week, a busy schedule for the US includes features January’s retail sales, industrial output and CPI figures. On the other hand, with all eyes on Trump and the Fed, the dollar reaction to the data may be limited.

A potential week of struggle for the euro

There’s also a fairly light Eurozone schedule regarding market data, with the January ECB ‘account’ as the main highlight. Therefore, the euro could struggle this week and the GBPEUR pairing would potentially move upwards, should the expected results follow through. We may also see a dip in confidence as the UK could lose its position as a ‘gateway to Europe’ for the worldís financial services industry, according to last weekís speech by Dr Andreas Dombret, an executive board member at the Bundesbank. However, weíre likely to see these comments dismissed should this week follow suit, as mentioned.

Expected increase in UK retail sales

Lastly, here in the UK, retail sales are expected to record a solid increase for January, while a further mark-up on inflation is also predicted. Overall, the UK’s macro schedule looks like it could be beneficial for the strength of Sterling across the next few days with CPI figures, average earnings index and claimant count change.

Looking at today’s calendar, this morning we will receive Europe December industrial production reports for France, Italy and the UK. As we look at the US this afternoon import price index reading for January is the main piece of data together with the flash University of Michigan consumer sentiment reading for this month. As mentioned earlier, the main event to keep an eye on is the meeting between President Trump and Japan PM Abe.

Markets flat on Wednesday

Wise Money markets were rather flat on Wednesday, with stocks stuck in their recent range.

Wise Money markets were rather flat on Wednesday, with stocks stuck in their recent range.

Although the dollar reversed early gains after coming under pressure from a decline in U.S. The soft Treasury yields released had investors pricing out a March rate hike by the Fed amidst the uncertainty over Donald Trump’s economic policies. Most of the interest yesterday was in Gold, which continued its recent gains and made a new 3 month high as many investors deem it to be a safe haven. Furthermore, Investors in the market are concerned by the wave of elections coming up in Europe, not least in France where the far-right candidate Marine Le Pen is gaining mounting support as she promises a referendum on EU membership.

Euro under pressure

The euro is coming under pressure in the markets due to a cocktail of perceived headwinds. The French political situation has become more uncertain and we also have renewed concern over Greece alongside problems in the Italian banking sector. European central Bank President Mario Draghi speaking yesterday attempted to reassure the markets and outlined that he sees the ECB maintaining an accommodative monetary policy until his term concludes in 2019. This helped to restore some confidence but scrutiny will be high on developments within Europe.

Light day in terms of data

Today we have a light day in terms of data with US initial claims the only data of note. Jobless claims have fallen recently and today the feedback is expected to show that claims remain at low levels. Tonight, we have Bank of England governor Mark Carney speaking and this could lead to some volatility in the pound.