Archive: August2017

Markets await UK wage growth data and FOMC minutes

15 Aug 2017
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US Dollar

Expected Range 1.28 – 1.2960

The pound took a dive yesterday as official figures showed annual inflation held steady at 2.6% when an uptick to 2.7% was predicted. The accompanying PPI reading was also unchanged m/m giving further evidence of inflation starting to cool in the UK. Today’s Average Earnings Index data will be of key interest to holders of sterling to see if there is another narrowing of the spread between wages and CPI. If there is we could see sterling rally however with inflation expected to peak very soon before retreating as the pounds post-referendum drop is washed out of the calculations its very unlikely we will see a rate hike from the BoE anytime soon. Brexit uncertainty and a marked slowdown in the UK economy this year is likely to weigh on MPC members minds (McCafferty and Saunders aside). There was finally good news from American shopping malls with Retail Sales figures printing green for the first time this summer. The miserable run came to an end with the core print showing 0.5% growth m/m (vs exp of 0.3%) and the overall reading showing 0.6% growth m/m (vs exp of 0.3%). Later today from the States we have the minutes from the FOMC’s last meeting with a reduction of its balance sheet expected to be all but confirmed for September. A December rate hike is still on the cards however the poor run of data over the summer has meant chances are at best 50/50. GBP/USD has fallen from 1.2960 to currently trade around the 1.2850 handle. Later today also sees Building Permits, Housing Starts and Crude Oil inventory figures from across the pond. 

Euro

Expected Range 1.0930 – 1.1045

Eurozone data is thin on the ground this week with today’s second reading of Q2 GDP the only event of note and expected to show no change from the initial 0.6% q/q. Next week sees Mario Draghi attending the Jackson Hole Symposium for the first time in a few years and some expect some announcement on a scaling back of asset purchases to be confirmed. It’s likely though he will wait until the September ECB get together to confirm this, no doubt the euros recent rally will be forefront of his thinking at present. EUR/USD trades at 1.1740 and GBP/EUR is down to 1.0945. 

Australian Dollar

Expected Range 1.63 – 1.6480

Australian Wage Price Index q/q was on target at 0.5% overnight with little movement in the local dollar on the back of it. Holders of the Aussie will now be eyeing tonight’s unemployment data with a hold at 5.6% expected. AUD/USD is at .7850 and GBP/AUD at 1.6370. 

New Zealand Dollar

Expected Range 1.7680 – 1.7820

Quarterly PPI in New Zealand is predicted to rise from 0.8% to 0.9% tonight reversing the recent downward trend we have seen since late last year. It’s likely the FOMC minutes will be the main driver for the antipodeans however. NZD/USD is at .7250 and GBP/NZD is at 1.7725. 

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Markets await UK wage growth data and FOMC minutes

15 Aug 2017
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US Dollar

Expected Range 1.28 – 1.2960

The pound took a dive yesterday as official figures showed annual inflation held steady at 2.6% when an uptick to 2.7% was predicted. The accompanying PPI reading was also unchanged m/m giving further evidence of inflation starting to cool in the UK. Today’s Average Earnings Index data will be of key interest to holders of sterling to see if there is another narrowing of the spread between wages and CPI. If there is we could see sterling rally however with inflation expected to peak very soon before retreating as the pounds post-referendum drop is washed out of the calculations its very unlikely we will see a rate hike from the BoE anytime soon. Brexit uncertainty and a marked slowdown in the UK economy this year is likely to weigh on MPC members minds (McCafferty and Saunders aside). There was finally good news from American shopping malls with Retail Sales figures printing green for the first time this summer. The miserable run came to an end with the core print showing 0.5% growth m/m (vs exp of 0.3%) and the overall reading showing 0.6% growth m/m (vs exp of 0.3%). Later today from the States we have the minutes from the FOMC’s last meeting with a reduction of its balance sheet expected to be all but confirmed for September. A December rate hike is still on the cards however the poor run of data over the summer has meant chances are at best 50/50. GBP/USD has fallen from 1.2960 to currently trade around the 1.2850 handle. Later today also sees Building Permits, Housing Starts and Crude Oil inventory figures from across the pond. 

Euro

Expected Range 1.0930 – 1.1045

Eurozone data is thin on the ground this week with today’s second reading of Q2 GDP the only event of note and expected to show no change from the initial 0.6% q/q. Next week sees Mario Draghi attending the Jackson Hole Symposium for the first time in a few years and some expect some announcement on a scaling back of asset purchases to be confirmed. It’s likely though he will wait until the September ECB get together to confirm this, no doubt the euros recent rally will be forefront of his thinking at present. EUR/USD trades at 1.1740 and GBP/EUR is down to 1.0945. 

Australian Dollar

Expected Range 1.63 – 1.6480

Australian Wage Price Index q/q was on target at 0.5% overnight with little movement in the local dollar on the back of it. Holders of the Aussie will now be eyeing tonight’s unemployment data with a hold at 5.6% expected. AUD/USD is at .7850 and GBP/AUD at 1.6370. 

New Zealand Dollar

Expected Range 1.7680 – 1.7820

Quarterly PPI in New Zealand is predicted to rise from 0.8% to 0.9% tonight reversing the recent downward trend we have seen since late last year. It’s likely the FOMC minutes will be the main driver for the antipodeans however. NZD/USD is at .7250 and GBP/NZD is at 1.7725. 

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Brexit: British Pensioners Leaving for Europe

14 Aug 2017
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British pensioners and individuals on the way to retirement are leaving the UK to settle in countries such as Cyprus, France and Spain before the Brexit deadline, in fear that emigrating will become a lot more difficult in the future. Some experts believe that any deal after Brexit would unlikely include any concessions to allow […]

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Pound falls as inflation stalls

14 Aug 2017
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US Dollar

Expected Range 1.2850 – 1.2990

The dollar enjoyed a positive day yesterday as there was no further escalation in the war of words between the US and North Korea. North Korea’s leader, Kim Jong-un has announced a review of his plan to fire missiles towards the US military base on the Pacific island of Guam helping to restore an air of calm around the world. Equity markets also rallied with the dollar as risk returned around the world to the detriment of the traditional safe-havens JPY and CHF. GBP/USD has fallen back under 1.30 over the past 24 hours as concerns over Brexit also weigh on the pound. Later today we have Retail Sales figures from the States with a rebound from the previous series of poor readings expected. A moment ago we saw sterling fall even further as UK CPI held steady at 2.6% when a move to 2.7% was predicted. We are currently at 1.2915 with all eyes now focusing on tomorrows wage growth data to see if the spread over CPI and salary rises narrows even further.

Euro

Expected Range 1.0955 – 1.1070

This morning has seen another strong GDP reading from Germany with the economy expanding at a preliminary reading of 0.6% in the second quarter. Although this wasn’t has high as the 0.7% expected it still shows the German economy is powering ahead unconcerned with the ongoing Brexit negotiations. The slight miss was tempered by the previous reading being revised up from 0.6% to 0.7%. EUR/USD currently trades at 1.1745 down nearly a cent since the start of the week. It’s a relatively quiet week from Euroland with France and Italy enjoying a holiday today for Assumption Day and little top tier data for the rest of the week. GBP/EUR is lower at 1.0990.

Australian Dollar

Expected Range 1.6430 – 1.6560

The minutes from the RBA’s last meeting were released yesterday and the local dollar weakened as a result. Last month’s meeting had seen the Aussie soar as the accompanying statement pointed to higher rates sooner than had been previously predicted with a higher neutral rate also expected. The minutes however pushed the Aussie a little lower as ongoing concerns were shown over the state of household debt. AUD/USD has fallen to .7835 overnight with GBP/AUD hovering around the 1.65 handle. 

New Zealand Dollar

Expected Range 1.7660 – 1.7780

A resurgent US dollar has pushed the Kiwi lower over the past 24 hours as the aforementioned cooling of tensions in North Korea have seen the greenback well –bid. NZD/USD has fallen to .7285 with GBP/NZD at 1.7725. 

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Pound falls as inflation stalls

14 Aug 2017
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US Dollar

Expected Range 1.2850 – 1.2990

The dollar enjoyed a positive day yesterday as there was no further escalation in the war of words between the US and North Korea. North Korea’s leader, Kim Jong-un has announced a review of his plan to fire missiles towards the US military base on the Pacific island of Guam helping to restore an air of calm around the world. Equity markets also rallied with the dollar as risk returned around the world to the detriment of the traditional safe-havens JPY and CHF. GBP/USD has fallen back under 1.30 over the past 24 hours as concerns over Brexit also weigh on the pound. Later today we have Retail Sales figures from the States with a rebound from the previous series of poor readings expected. A moment ago we saw sterling fall even further as UK CPI held steady at 2.6% when a move to 2.7% was predicted. We are currently at 1.2915 with all eyes now focusing on tomorrows wage growth data to see if the spread over CPI and salary rises narrows even further.

Euro

Expected Range 1.0955 – 1.1070

This morning has seen another strong GDP reading from Germany with the economy expanding at a preliminary reading of 0.6% in the second quarter. Although this wasn’t has high as the 0.7% expected it still shows the German economy is powering ahead unconcerned with the ongoing Brexit negotiations. The slight miss was tempered by the previous reading being revised up from 0.6% to 0.7%. EUR/USD currently trades at 1.1745 down nearly a cent since the start of the week. It’s a relatively quiet week from Euroland with France and Italy enjoying a holiday today for Assumption Day and little top tier data for the rest of the week. GBP/EUR is lower at 1.0990.

Australian Dollar

Expected Range 1.6430 – 1.6560

The minutes from the RBA’s last meeting were released yesterday and the local dollar weakened as a result. Last month’s meeting had seen the Aussie soar as the accompanying statement pointed to higher rates sooner than had been previously predicted with a higher neutral rate also expected. The minutes however pushed the Aussie a little lower as ongoing concerns were shown over the state of household debt. AUD/USD has fallen to .7835 overnight with GBP/AUD hovering around the 1.65 handle. 

New Zealand Dollar

Expected Range 1.7660 – 1.7780

A resurgent US dollar has pushed the Kiwi lower over the past 24 hours as the aforementioned cooling of tensions in North Korea have seen the greenback well –bid. NZD/USD has fallen to .7285 with GBP/NZD at 1.7725. 

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US CPI helps cable push higher

13 Aug 2017
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US Dollar

Expected Range 1.2960 – 1.3080

Cable has broken 1.3000 overnight. There was no data from the UK on Friday, so all eyes were on the US CPI releases, and with good reason. The US bureau of labour statistics stated that consumer prices rose 0.1% in July from a month earlier, compared to the forecast 0.2% increase and a 0.1% gain in the prior month. Year on year, figures also showed a lower than forecast 1.7% increase on last month versus the expected 1.8%. This saw dovish FOMC member Neil Kashkari comment that these recent numbers are enough for the FED to hold off on any further interest rate hikes, which took the US Dollar index 0.34% lower and the FED fund futures pricing a 38% chance of an interest rate hike in December. Global political tensions along with the Charlottesville catastrophe over the weekend, where one woman was killed and 17 were injured in counter-protests to a white supremacy rally, has seen investors seek more risk averse currencies such as the CHF and JPY. Especially as Japanese GDP beat expectation, growing 1% in the second quarter. GBP/USD 1.2990 – 9:30am.

The key data releases for today have already been released and neither were from these currency locations. However, you only need to look to tomorrow for domestic news to drive the GBP and USD as we see CPI y/y released early tomorrow in the UK and retail sales in the US early afternoon. Until these releases, I would expect the US dollar to remain under pressure.

Euro

Expected Range 1.0960 – 1.1030

The single currency continues to remain strong against the Greenback and Pound. Early Friday saw the release of low impact data from Europe, with the most notable releases being German final CPI coming in as expected (0.4%) and French non-farm payroll q/q, coming in above expectation (0.5%). However, EUR/USD was driven higher as US own CPI release lowered the expectation of an interest rate hike before the end of the year. The currency pair reached a high of 1.1840 on the news. GBP/EUR dipped below 1.1000 for the first time since the vote for the UK to leave the Eurozone. GBP/EUR 1.1010 9:30am.

There is no macroeconomic data from the Eurozone today and there is little data elsewhere for that matter. Tomorrow at 7am there is German prelim GDP q/q, which starts a busier day for economic news.

Australian Dollar

Expected Range 1.6430 – 1.7540

The Aussie gains against the Pound after breaking recent ranges. After RBA Governor Lowes comments last week and investors sought after less risky assets such JPY, CHF and Gold due to global political tensions, Sterling rose to 1.6563 versus the Aussie. However, with tensions easing and data looking ahead to this week rather than today, the Aussie has gained back on these losses. GBP/AUD 1.6499 – 9:30am.

New Zealand Dollar

Expected Range 1.7750 – 1.7820

Sterling is lower against the Kiwi. The currency pair has fallen from the highs of 1.7900, seen last week, and has traded within a narrow range since the close of play Friday. Roughly a 25 pip range in movement, in and out of 1.7800, has been seen with little data to take into consideration domestically. GBP/NZD 1.7810 – 9:30am.

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US CPI helps cable push higher

13 Aug 2017
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US Dollar

Expected Range 1.2960 – 1.3080

Cable has broken 1.3000 overnight. There was no data from the UK on Friday, so all eyes were on the US CPI releases, and with good reason. The US bureau of labour statistics stated that consumer prices rose 0.1% in July from a month earlier, compared to the forecast 0.2% increase and a 0.1% gain in the prior month. Year on year, figures also showed a lower than forecast 1.7% increase on last month versus the expected 1.8%. This saw dovish FOMC member Neil Kashkari comment that these recent numbers are enough for the FED to hold off on any further interest rate hikes, which took the US Dollar index 0.34% lower and the FED fund futures pricing a 38% chance of an interest rate hike in December. Global political tensions along with the Charlottesville catastrophe over the weekend, where one woman was killed and 17 were injured in counter-protests to a white supremacy rally, has seen investors seek more risk averse currencies such as the CHF and JPY. Especially as Japanese GDP beat expectation, growing 1% in the second quarter. GBP/USD 1.2990 – 9:30am.

The key data releases for today have already been released and neither were from these currency locations. However, you only need to look to tomorrow for domestic news to drive the GBP and USD as we see CPI y/y released early tomorrow in the UK and retail sales in the US early afternoon. Until these releases, I would expect the US dollar to remain under pressure.

Euro

Expected Range 1.0960 – 1.1030

The single currency continues to remain strong against the Greenback and Pound. Early Friday saw the release of low impact data from Europe, with the most notable releases being German final CPI coming in as expected (0.4%) and French non-farm payroll q/q, coming in above expectation (0.5%). However, EUR/USD was driven higher as US own CPI release lowered the expectation of an interest rate hike before the end of the year. The currency pair reached a high of 1.1840 on the news. GBP/EUR dipped below 1.1000 for the first time since the vote for the UK to leave the Eurozone. GBP/EUR 1.1010 9:30am.

There is no macroeconomic data from the Eurozone today and there is little data elsewhere for that matter. Tomorrow at 7am there is German prelim GDP q/q, which starts a busier day for economic news.

Australian Dollar

Expected Range 1.6430 – 1.7540

The Aussie gains against the Pound after breaking recent ranges. After RBA Governor Lowes comments last week and investors sought after less risky assets such JPY, CHF and Gold due to global political tensions, Sterling rose to 1.6563 versus the Aussie. However, with tensions easing and data looking ahead to this week rather than today, the Aussie has gained back on these losses. GBP/AUD 1.6499 – 9:30am.

New Zealand Dollar

Expected Range 1.7750 – 1.7820

Sterling is lower against the Kiwi. The currency pair has fallen from the highs of 1.7900, seen last week, and has traded within a narrow range since the close of play Friday. Roughly a 25 pip range in movement, in and out of 1.7800, has been seen with little data to take into consideration domestically. GBP/NZD 1.7810 – 9:30am.

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Risk off approach expands forcing stocks down.

10 Aug 2017
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US Dollar
Expected Range 1.2950 to 1.2999
As the weeks trading draws to a close we have seen a risk off approach to investment continuing to motivate and monopolise movement. Safe havens such as CHF, JPY and gold have seen a surge in price while US sto…

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Risk off approach expands forcing stocks down.

10 Aug 2017
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US Dollar
Expected Range 1.2950 to 1.2999
As the weeks trading draws to a close we have seen a risk off approach to investment continuing to motivate and monopolise movement. Safe havens such as CHF, JPY and gold have seen a surge in price while US sto…

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Safe havens rally as global uncertainty remains.

09 Aug 2017
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US Dollar

Expected Range 1.2910 to 1.2990

Only minor releases came from the US yesterday in the form of Prelim Nonfarm Productivity and Prelim Unit Labor Costs. Neither release did much to motivate markets as the USD was able to continue its gains across the board. Tensions between the US and North Korea continue to escalate with leaders of both nations continuing to talk up their military power. North Korea has now threatened to directly target US territories and as rhetoric continues to intensify we get closer to the possibility of action being taken.  The uncertainty caused here is forcing markets to take a risk off approach to investment which has seen CHF, JPY and Gold rise by almost 2.5%. The USD has maintained a strong position despite the political disputes and will likely continue to strengthen off the back of positive data. Today the focus will shift to inflation and unemployment claims. Both figures are forecast to come in with no change from previous readings as markets will then look towards tomorrows CPI releases which are forecast to show a slight increase. We will also be hearing from Fed Member Dudley today and markets will be paying close attention to the rhetoric used here for any news regarding potential rate hikes later this year.  

Sterling continued to remain under pressure following a day’s trading with no data to discuss. GBP/USD fell below the 1.3 level as the Dollar continues to put pressure on the majority of currencies. Markets will finally have something to digest from the UK today with the first major release of the week. Manufacturing Production m/m is scheduled for release this morning and we are forecast to see a slight uptick from -0.2% to 0%. This will be released alongside a plethora of minor releases including Goods Trade Balance, Construction Output, Industrial Production and a NIESR GDP estimate. Positive figures here could lead to a recovery from the pound and could build momentum for the currency as we move towards the back end of the week. GBP/USD is currently trading at 1.2962.

Euro

Expected Range 1.1010 to 1.1090

A risk off approach to investment caused by global events has seen the EUR retreat slightly, most notably against the USD and CHF. We only had minor releases from the EZ yesterday, coming in the form of Italian Industrial Production m/m. This figure was forecast to show a slight dip but surprised markets by increasing to 1.1% from 0.7%. This did little to inspire movement as markets were swayed by global sentiment and a desire to invest in safe havens. Today will again show a quiet day from Europe with minor releases from France and Italy scheduled this morning. French industrial production has shown a sharp decline and this figure will do little to help a struggling EUR. With only minor releases scheduled for tomorrow from Europe it is likely that the currency could continue to struggle this week as markets continue to be motivated by a risk off approach. GBP/EUR is currently trading at 1.1059.

Australian Dollar

Expected Range 1.6410 to 1.6490

No data released from Australia yesterday as sentiment drives markets. The currency has remained relatively steady this week despite global uncertainty rising. Tonight we will hear from RBA Governor Lowe who is scheduled to testify before the House of Representatives Standing Committee on Economics. Markets have been swayed over the past few months by comments and speculation as to the central bank’s policy moving forward and we will likely see movement here. GBP/AUD is currently trading at 1.6453. 

New Zealand Dollar

Expected Range 1.7680 – 1.7900

The New Zealand Dollar retreated slightly following the RBNZ rate announcement and statement. The central bank left rates unchanged at 1.75%, stating that the next hike may not be until 2019, and downgraded inflation forecasts. Monetary policy will remain unchanged and accommodative for the time being as the RBNZ reiterate that a weaker currency is needed for consistent growth. GBP/NZD is currently trading at 1.7844.

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