Posts belonging to Category Money Markets



Euro loses election gains, pound hits 6 month high vs. US dollar

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The pound managed to strike new multi-month highs against the US, Australian, New Zealand and Canadian dollars yesterday without the backing of any positive UK developments.

The ECB rate decision helped GBP/EUR achieve highs of €1.1885, dissatisfaction with Trump pushed GBP/USD all the way to $1.2914, and further Canadian dollar losses meant GBP/CAD was able to surge to a new best level of C$1.7633. Meanwhile, GBP/AUD climbed another cent to AU$1.7326 as GBP/NZD achieved NZ$1.8815 – its strongest rate since July last year.

A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Yesterday’s European Central Bank (ECB) meeting left the euro struggling, with President Mario Draghi seeming keen to quash speculation that there are any plans to adjust monetary policy at this juncture.

Although he acknowledged that the Eurozone’s economic outlook is a little brighter, he also asserted that ‘a very substantial degree of monetary accommodation’ is still necessary in order to give inflation a leg up.

With the euro falling in the wake of Draghi’s comments, the pound was able to creep its way up to its best levels since the results of the first round of the French general election were announced.

While Draghi was responsible for the euro’s losses, it was President Trump causing reduced demand for the US dollar. Concerns that his hotly-anticipated tax plan was actually a bit of a flop saw USD exchange rates slide. A seriously worse-than-expected US durable goods orders report didn’t help the situation and GBP/USD skipped merrily to a six-month high.

Persistent weakness in the commodity currencies also worked in the pound’s favour, allowing the British currency to advance to some of its best levels since the EU referendum.

News that the GfK survey of consumer confidence softened from -6 to -7 in April failed to take the wind out of the pound’s sales on Friday.

Wise Money market data coming up

The UK and US GDP reports are some of the key highlights on the economic calendar today. If US growth slows to the extent forecast in the first quarter (from 2.1% to 1.0%) GBP/USD could be headed for even dizzier heights.

The Eurozone is also set to publish inflation figures for April. In light of Draghi’s comments yesterday, slowing inflation is liable to send the euro lower. Conversely, if non-core inflation increases to 1.8% from 1.5% as anticipated the euro could bounce back before the weekend.

Looking ahead to next week and the biggest economic movers of GBP exchange rates will be the UK’s services, construction and manufacturing PMIs for April. Indications that economic output is slowing would put the pound under pressure as campaigning for the UK snap election intensifies.

 

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’.

 

Will the pound extend its election gains next week?

After an explosive start to the week pound fluctuations have been fairly minimal, with the currency managing to hold on to the multi-month highs achieved after Tuesday’s election announcement.

After an explosive start to the week pound fluctuations have been fairly minimal, with the currency managing to hold on to the multi-month highs achieved after Tuesday’s election announcement.

GBP/EUR began the week around €1.1790 and looks set to close it above €1.19, GBP/USD is up from $1.25 to $1.28, GBP/AUD is riding high at AU$1.70 (having started the week at AU$1.65) and GBP/NZD has recovered from NZ$1.78 to NZ$1.82.

The outcome of the first round of the French election will be the driving force behind shifts in the euro for much of next week.

The pound largely remained at its best levels of 2017 against all the major currencies on Thursday, with UK election expectations lending support to GBP exchange rates.

GBP/EUR was able to cling to the €1.19 level despite the euro getting a boost from a poll predicting victory for pro-EU candidate Emmanuel Macron in the upcoming French election.

Economic data had little-to-no impact on pound trading as investors fixated on the belief that June’s UK election will result in an increased majority for the Conservatives and subsequently strengthen Theresa May’s negotiating position in Brexit talks with the EU.

 

 

Wise Money market data coming up

Although election news is likely to remain one of the main catalysts for currency movement in the days and weeks ahead, there are some entries on next week’s economic calendar worth watching out for.

Pound – If concerns about the upcoming election emerge the pound has the potential to reverse this week’s gains. Sterling may also be pressured lower if upcoming reports (including the Rightmove house price index, public finance figures, the GfK consumer confidence gauge and GDP data for the first quarter) indicate that UK economic output is easing.

Euro – The outcome of the first round of the French election will be the driving force behind shifts in the euro for much of next week. If Macron dominates proceedings the common currency could climb. However, if either Le Pen or Melenchon (the anti-EU candidates) appear to have the most support, we can expect losses for EUR exchange rates.

US dollar – There are several high-impact US releases scheduled for next week, including a consumer confidence gauge, trade balance numbers, durable goods orders figures and Q1 GDP. Any reports which reduce the odds of the Federal Reserve increasing interest rates in June could send USD lower, while data supportive of higher borrowing costs would be US dollar positive.

Other – General risk sentiment will keep the Australian, New Zealand and Canadian dollars on their toes in the days ahead, but Australian inflation numbers and a speech from an RBA official also have the potential to inspire AUD fluctuations. From New Zealand we’ve got credit card spending numbers, trade balance data and the ANZ business confidence index to focus on, while CAD shifts may follow the publication of domestic retail sales and GDP numbers.

 

Pound lingering at multi-month highs as MPs back election

The pound racked up serious gains earlier in the week and has (so far) largely managed to hold on to them.

The pound racked up serious gains earlier in the week and has (so far) largely managed to hold on to them.

The GBP/EUR exchange rate remains above the €1.19 level, GBP/USD is clinging to six-month highs of $1.28 and GBP/CAD advanced from C$1.7199 to C$1.7285. However, GBP/AUD eased back from A$1.7100 to A$1.7020 while GBP/NZD slipped from NZ$1.8321 to NZ$1.8144.

Carney may address monetary policy, and if he indicates that UK interest rates aren’t likely to rise for some time to come the pound may give up some of this week’s gains.

Although the pound has come away from the week’s best levels, the currency remains close to the multi-month highs achieved on Tuesday.

On Wednesday MPs voted overwhelmingly to back the Prime Minister’s decision to hold a snap general election on June 8th.

The House of Commons voted 522 to 13 in favour of bringing the general election forward from 2020, with SNP MPs abstaining. As all the major parties had previously voiced their support for an early election, the news failed to shift the pound.

The UK is now bracing itself for the onslaught of yet more political campaigning, although the present pound support is coming from the expectation that the Conservatives will increase their majority after June’s vote.

In other news, the New Zealand dollar was boosted by a domestic report detailing a surge in inflation in the first quarter of the year. New Zealand’s CPI came in at 1.0% on a quarter-on-quarter basis and 2.2% year-on-year – this was up from a previous annual figure of 1.3%.

This morning’s German producer price index came in below forecast levels, at 0.0% on the month and 3.1% on the year vs. predictions of 0.2% and 3.2%.

Wise Money market data coming up

Barring any fresh political surprises, today’s session could be a comparatively calm one for the major currencies. That being said, there are a couple of economic releases to look out for.

The Eurozone’s construction output figures for February are unlikely to have much impact on the euro, but the region’s consumer confidence gauge may prove more influential. The measure of sentiment is believed to have improved slightly from -5 to -4.8 in April.

However, with concerns about the outcome of the upcoming French election mounting, the index may actually register a dip in confidence – and such a result could weaken the euro.

We’ve also got a speech from Bank of England (BoE) Governor Mark Carney ahead. Carney may address monetary policy, and if he indicates that UK interest rates aren’t likely to rise for some time to come the pound may give up some of this week’s gains.

As the day’s US news (initial jobless claims/continuing jobless claims figures and the nation’s leading indicators report for March) isn’t the most market-moving, the US dollar could continue reacting to geopolitical tensions.

 

 

 

Seven month highs for GBP on UK election news

We thought this week would be a fairly quiet one in the world of currency… how wrong we were.

We thought this week would be a fairly quiet one in the world of currency… how wrong we were.

UK Prime Minister Theresa May delivered a major bombshell on Tuesday morning when she announced the intention to hold a snap election on June 8th. The news sent shockwaves through the currency market and sent the pound to a succession of multi-week and multi-month highs.

The GBP/EUR exchange rate jumped from €1.1754 to €1.1962, GBP/USD surged from $1.2525 to $1.2856 (a six-month high), and both GBP/CAD and GBP/NZD achieved seven-month highs (of C$1.7234 and NZ$1.8287 respectively).

UK election news is likely to continue dominating headlines, and dictating pound movement, as the week progresses.

UK data releases are in pretty short supply this week, so we returned from the Easter break assuming that pound movement would be fairly minimal.

As it happened, PM Theresa May unexpectedly put a cat among the pigeons and inspired some of the pound’s best gains since the EU referendum last year.

May had previously asserted that there would be no election before 2020 so her sudden turnaround was surprising to say the least.

May stated; ‘Division in Westminster will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country. So we need a general election and we need one now, because we have at this moment a one-off chance to get this done while the European Union agrees its negotiating position and before the detailed talks begin.’

At the moment it is expected that the election will see PM May gain a larger majority in parliament, an outcome which would improve the government’s ability to follow through with the aims of its Brexit negotiations.

Wise Money market data coming up

 

UK election news is likely to continue dominating headlines, and dictating pound movement, as the week progresses.

This morning’s Eurozone inflation data is unlikely to have much of an impact on the euro, given that it is forecast to confirm that the region’s CPI printed at 1.5% on the year and 0.8% on the month in March.

While the Fed’s Beige Book could inspire some GBP/USD fluctuations later in the day it would need to contain some seriously sensational information to counter the impact of this week’s UK election shocker.

We are likely to see volatility in the GBP/NZD pairing however after New Zealand publishes its inflation report for the first quarter.

Economists have forecast that inflation surged from 0.4% to 0.8% quarter-on-quarter and from 1.3% to 2.0% year-on-year.

 

GBP/EUR hits highest levels since February

With demand for higher-risk currencies dropping in reaction to growing geopolitical tensions, the pound was able to hit new highs against currencies like the euro and US dollar.

With demand for higher-risk currencies dropping in reaction to growing geopolitical tensions, the pound was able to hit new highs against currencies like the euro and US dollar.

The GBP/EUR exchange rate advanced to €1.1821 – it’s highest levels since February – while GBP/USD approached $1.26.

GBP/AUD stormed 0.7% higher as soon as markets opened on Monday to strike AU$1.6674 while GBP/NZD rallied to NZ$1.7962.

The week’s main causes of pound movement are likely to be a speech from Bank of England (BoE) Governor Mark Carney on Thursday and the UK’s latest retail sales numbers on Friday.

Last week President Donald Trump sent the US dollar tumbling when he asserted that the currency is currently overvalued, and GBP/USD has managed to hold above the $1.25 level ever since.

The pound’s strength against the other majors is partially due to concerns surrounding the increasingly tempestuous relationship between the US and North Korea.

With North Korea attempting to demonstrate its strength over the weekend with a military parade featuring a number of long-distance missiles, currencies like the Australian and New Zealand dollars slumped.

The US dollar also slid as a result of the North Korean news on the belief that geopolitical uncertainty could prevent the Federal Reserve from increasing interest rates as rapidly as previously hoped.

Meanwhile, speculation that the outcome of the French Presidential election could be too close to call helped the pound rack up gains against the euro.

Wise Money market data coming up

There’s no UK news scheduled for release today, so pound movement could be limited.

Some GBP/USD fluctuations may be inspired by the US building permits, housing starts and manufacturing/industrial production reports.

If the data impresses, the pound may give up some of its recent gains in hopes that domestic strength will be enough to push the Fed into continuing its rate-hiking policy.

GBP/CAD could also experience movement following the release of Canada’s existing home sales report given current concerns about Canada’s housing market.

The week’s main causes of pound movement are likely to be a speech from Bank of England (BoE) Governor Mark Carney on Thursday and the UK’s latest retail sales numbers on Friday.

Consumer spending is believed to have fallen by -0.5% on the month, taking the annual figure from 4.1% to 3.8%.

If retail sales are shown to have dropped in March the pound could slide at the end of the week.

 

Is the pound headed for new highs this week?

A Sterling surge before the weekend helped the pound close out the week in a stronger position against the euro and recover earlier losses against both the US and Australian dollars.

A Sterling surge before the weekend helped the pound close out the week in a stronger position against the euro and recover earlier losses against both the US and Australian dollars.
Over the last seven days GBP/EUR has recovered from €1.1451 to hit highs of €1.1741 while GBP/USD returned to trading in the region of $1.2526 after dropping to lows of $1.2385. GBP/AUD also bounced back from its worst levels of AU$1.6185 to trend in the region of AU$1.6470.

But can the pound’s run of gains continue? If these reports show that the UK economy closed out the first quarter of 2017 in a strong position, the pound’s recent run of gains could continue.

The pound ended the week on a high thanks to the UK’s latest current account report. One of economists’ big concerns about the post-referendum period was that the current account deficit could spiral, so the news that the shortfall actually shrank from -£25.7 billion in Q3 to -£12.1 billion in Q4 gave Sterling a significant boost.

The UK’s Q4 growth data was more mixed, with the rate of quarter-on-quarter expansion coming in at 0.7% (as forecast) but annual growth being revised down to 1.9%.
The pound’s gains against the euro were also the result of the Eurozone’s inflation stats showing a sharper-than-anticipated slowing in consumer price pressures. The CPI dropped from 2.0% to 1.5% in March.

Wise Money market data

There are quite a few influential data releases to focus on today, including the UK’s manufacturing PMI and the Eurozone’s unemployment figures.
Over in the US we also have the Markit manufacturing and composite PMIs, the ISM manufacturing PMI and the ISM employment report.
The UK’s manufacturing PMI will be followed by its construction and services equivalents later in the week. If these reports show that the UK economy closed out the first quarter of 2017 in a strong position, the pound’s recent run of gains could continue.
As the UK’s services sector accounts for over 70% of GDP, a strong showing from this measure could push GBP exchange rates to new highs.
However, economists have forecast that today’s Eurozone unemployment data will show a decline in joblessness from 9.6% to 9.5%. If that proves to be the case it could undermine some of the recent strength in the GBP/EUR exchange rate. Similarly, upbeat manufacturing data from the US would be US dollar supportive, potentially pushing GBP/USD back below $1.25.

How did the boring budget impact the pound?

Speculation surrounding the UK’s Spring Budget saw the pound drop to seven week lows on Wednesday.

Speculation surrounding the UKís Spring Budget saw the pound drop to seven week lows on Wednesday.

 

But the currency’s reaction to the news was less dramatic than some had anticipated.

What movement have we seen in the currency market?

Although the budget triggered mild pound gains, the GBP/USD exchange rate still extended losses (hitting 1.2146) while GBP/EUR lingered below 1.1550.

The pound fared better against the Australian dollar however (advancing back above 1.6150) and managed to bounce back from a weekly low of 1.6322 against the Canadian dollar to 1.6422.

So, what happened?

The day’s big news, the UK’s Spring Budget, turned out to be a bit anticlimactic. Although the pound broadly weakened in the build up to the event, Chancellor of the Exchequer Phillip Hammond delivered on his pledge to keep the budget boring and GBP edged higher as a result.

Most of what was said had already been preannounced, and although forecasts for growth in 2017 were positively revised from 1.4% to 2.0%, projections for 2018 and 2019 were cut.

The gains in the GBP/AUD exchange rate were actually caused by the Australian dollar falling following surprising Chinese trade figures, while oil prices dropping to an 8-week low left the Canadian dollar weaker.

Meanwhile, support for the US dollar came from an unexpectedly impressive US employment report. The ADP employment change number came in at 298k rather than the predicted 185k and kept the odds of the Federal Reserve increasing interest rates in March high.

The euro’s performance was a little more mixed ahead of the European Central Bankís rate decision.

What should you be looking out for today?

While all eyes were on the UK yesterday, the Eurozone will be dominating the spotlight in the hours ahead and GBP/EUR volatility could follow the European Central Bankís (ECB) latest policy decision.

A cautious outlook or hints that the central bank has no plans to taper its quantitative easing scheme in the near future would be euro-negative and could help the pound bounce back from its lows.

That being said, if ECB President Mario Draghi is encouraging about the Eurozoneís outlook and indicates that rising inflation could prompt the ECB to increase interest rates, we would expect to see the euro gain and GBP/EUR slide.

Spring budget could trigger pound shifts today

The pound dropped to new multi week lows ahead of the spring budget and could extend those losses today if tax hikes and spending cuts are revealed.

The pound dropped to new multi week lows ahead of the spring budget and could extend those losses today if tax hikes and spending cuts are revealed.

What movement have we seen in the currency market?

While the Australian dollar gained on a cautiously optimistic interest rate announcement from the Reserve Bank of Australia (RBA) and the US dollar remained supported by Fed rate hike expectations, the poor pound experienced another day of declines.

Sterling slid by -0.3% to hit seven-week lows against the euro and US dollar on Tuesday – with GBP/USD falling below 1.22.

What happened?

Well, for starters the UK published another batch of disappointing economic data.

Concerns that rising inflation and stagnant wage growth are hampering consumer spending were compounded as the British Retail Consortiumís (BRC) annual like-for-like sales figure for February came in at -0.4%, revealing a sharper drop than forecast.

Economist Samuel Tombs said of the result; ‘The BRC’s survey provides more evidence that the surge in retail sales in the second half of last year reflected consumers bringing forward purchases from 2017, because they anticipated price rises. The weakness was concentrated again in non-food sales, which fell by 0.2% on a total basis in the three months to February, the lowest growth since November 2011.’

Halifax housing data also showed that house price growth slowed to a three-year low.

Adding to the pound’s woes was speculation surrounding today’s UK spring budget.

What should you be looking out for?

Chancellor of the Exchequer Phillip Hammond is expected to discuss grammar school funding, social care, youth employment, fuel prices, stamp duty and pensions.

If the markets don’t like what Hammond has to say, the pound’s bad week could get even worse. However, if the Chancellor outlines some spending increases sterling may be able to pull itself away from this weekís lows.

Beyond the budget, the next UK news to focus on is the house price balance number from RICS. As it stands, a decline from 25% to 23% is anticipated.

Plan B for Article 50

Theresa May suffered a setback, as the House of Lords voted against changes to Article 50 Bill.

Theresa May suffered a setback, as the House of Lords voted against changes to Article 50 Bill.

The same Bill had passed through the House of Commons with little restrain, which had been expected to happen this time also. Theresa May, may now need a plan B for triggering Article 50 within the month of March, as the debate on EU nationals living in the UK doesnít appear to be any closer to striking an agreement.

Increase of UK house buyers

According to the figures published on Wednesday, UK House prices for January to February grew at a sluggish 0.6%, and 4.3% for the same period a year ago. Average house prices are now just under £206,000, which is up by just a bit less £700 from the same period last year. The number of house buyers has raised to around 11 for each household available, making it increasingly difficult for buyers to find their ideal home. Even though mortgage lending is still at significant lows, first time buyers, especially, are having to put down more deposits to meet with house price increases.

Investors left settled after Trumpís speech

US Stock Markets continued to rally after Donald Trump spoke to Congress, with the President toning down his usual Gung-Ho approach. The way Donald Trump led himself through the meeting left investors more settled, which hasn’t always been the case in his short period in charge of the biggest economy in the world. In other news, the Federal Reserve are expected to raise interest rates after a bright start to the economic year, with the first hike expected within the next 2-3 meetings.

Data to come

Today’s data from the EU could swing the FX Market, as Consumer Price index figures are out this morning, and are expected to be slightly higher for February year-on-year, with 1.9% against a previous 1.8%. We also have Swiss Gross Domestic Product to view, as well as Canadian Gross Domestic Product. Japanese Consumer Price Index numbers for January year-on-year are also expected to be slightly better off at 0.4% against a previous reading of 0.3%.