Good morning

High Low High Low
EUR/USD 1.1485 1.1454 USD/ZAR 11.4240 11.3650
GBP/USD 1.5177 1.5138 GBP/ZAR 17.33 17.21
EUR/GBP 0.7575 0.7555 USD/RUB 66.40 64.30
USD/JPY 118.00 117.35 USD/NGN 190.2 187.6
GBP/CHF 1.4056 1.3980 S&P 500 2050 2043
USD/ILS 3.9130 3.8825 Oil (Brent) 58.14 56.83

In our daily blog yesterday i wrote the following “Greece remains all over the news. Softer rhetoric from Greek authorities on a likely renegotiation of their aid package helped stabilise the EUR. YESTERDAY MORNING I wrote: “I think to a larger extent CB’s globally have used all their monetary policy bullets and are now looking at market fundamentals (lower oil prices, QE, negative policy rates, buying other assets, keeping rates stable for longer ) to raise GDP levels. No doubt a corrective pull back above 1.14 (1.1425 target) is probably a very healthy move and one which I would like very much to see. This would help wash out some of the “day traders” and allow the market makers to re-stock the USD hampers ahead of the next leg lower. There is nothing stopping the move from picking up pace once the pendulum swings back in favour of the USD.” WE GOT OUR WISH and our target was reached and crossed. EURUSD trading around 1.1445 as I write this have reached a respectable 1.1485 overnight on the back of softer rhetoric from the Greeks. We have not quite reached an agreement but the fact that they are talking the same language means some kind of agreement could essentially be reached. The EU MUST make sure they do not give in to Syriza’s demands, but rather work with them to find an amicable solution. As I have said many times, “GREXIT” IS NOT AN OPTION!!

Stock markets had a wonderful day yesterday amid a recovery in the oil price. While the price still remains on a $50 handle ($57.35), oil companies continue to feel the pinch (BP profits down 20% and ex Chairman Lord Brown said while there is still ample stock of oil in the North Sea, the cost of getting it out the ground is rather expensive and unless the companies in the region collaborate, they will go out of business). In every market there will be winners and losers. Oil companies have fleeced us for way to long. Finally the consumer is smiling.

Some respected analysts recently have been writing more and more about the EURDKK peg.  Denmark’s Nationalbank (DNB) is highly unlikely to abandon or revalue the DKK’s peg to the EUR under ERM II. Since the Swiss (SNB) abandoned its EURCHF floor, speculation has mounted that the DNB will need to do the same under pressure from foreign investors seeking Danish government bonds as close alternatives to low-yielding and increasingly scarce high-quality EUR area government paper. However, the situation in Denmark is quite different to that of Switzerland and the DNB faces supportive economic fundamentals. Suffice to say the DKK is not a safe haven currency.

Calendar wise we have UK Services PMI for January being published at 9.30am. Previous was 55.80 and expected 56.30. GBPUSD trading around 1.5150 as I write this having recovered from sub 1.50 last week. This is a USD sell off rather than a GBP recovery. A good PMI number should give the GBP another lift ahead of NFP on Friday which is always a BIG event. Recent data out the states has been muted so I am not expecting fireworks on Friday. I think the number will be a beauty, but not a giant killer.


Services PMI (Jan) 56.3 55.8