Good morning

High Low High Low
EUR/USD 1.0954 1.0900 USD/ZAR 11.8490 11.7787
GBP/USD 1.4896 1.4830 GBP/ZAR 17.60 17.50
EUR/GBP 0.7358 0.7342 USD/RUB 58.18 56.89
USD/JPY 119.83 119.55 USD/NGN 199.6 199.0
GBP/CHF 1.4283 1.4224 S&P 500 2,094 2,090
USD/ILS 3.9326 3.9132 Oil (Brent) 55.57 54.70


Markets have taken a breather after a tumultuous few months where the FED, ECB, Greece and China have all added extreme volatility to the fragile world economy. We might be past the worst, but we have by no means solved the issues. The FED continues to keep the market guessing as to when they are likely to raise interest rates, the ECB pumps in excess of €1trn into the EU to boost the Euro Zone, Greece continues to play hardball and risk being kicked out the EU, and China continues to slow down which is creating headaches for the PBoC and causing ripples amongst commodity and retail businesses alike. In other words there remains too many unknown factors impacting the financial markets on a daily basis.

Yesterday saw an improvement in EU/German manufacturing and services PMI giving the EUR a lift, while in the UK inflation dropped to 0.00% driven by lower global commodity prices, lower oil and lower food prices. No doubt when the Gov. of the BoE said rates could go down as much as they could go up he was being very serious. Given the inflation target of around 2%, you can see why rates are unlikely to go higher and I for one have now pushed my rate hike to either late Q4/early Q1 though this is very dependent on wage growth and a climb in inflation. Unemployment is dropping and businesses are all saying there has been a pick up giving rise to a feel good factor. With the elections a stone throw away, it is imperative the ruling Conservative party impress upon the electorate that it is they that deserve another 5 years and complete the impressive turnaround in the UK economy which they have achieved. Throwing this chance away will have severe repercussions for the UK economy should a Labour/SNP party come to power. Honestly and I mean no disrespect, but I think my 5 year old daughter could do a better job than the shadow Chancellor.

At a meeting last week the Swiss National Bank kept their rates unchanged at -0.75% and stated that they continued to see the CHF overvalued and should weaken over time. This supported their -ve interest rate policy. The SNB further stated that the deterioration in the Swiss economic outlook is likely to remain for the time being following the CHF appreciation and have thus downgraded their growth outlook. “Hot Money” continues to flow into the Swiss Banking system from the likes of Ukraine and Greece which in turn is adding pressure on the CHF and potentially force the SNB to lower rates again. However, after the SNB’s actions recently when they removed the peg, it is my opinion that they are likely to let the markets decide on the best value for the currency.

EM currencies continue to enjoy a respite after the recent fall in the USD. USDZAR testing 11.78 o/n in America. The SARB will publish their interest rate decision tomorrow with no change expected. If the SARB were clever (and they are) they would surprise the market and cut rates following other Nations in cutting rates to boost the economy. Now is the time to give a helping hand to the economy and boost the inflows of capital. After all I am sure the authorities in S.A want to retake the top economy in Africa spot from Nigeria. Off the subject, I am heartbroken for our cricket side who lost to the Kiwis (5 runs/2 balls). So close yet again!!


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