High Low High Low
EUR/USD 1.0909 1.0825 USD/ZAR 12.1100 12.0022
GBP/USD 1.4902 1.4801 GBP/ZAR 18.00 17.85
EUR/GBP 0.7340 0.7304 USD/RUB 58.87 56.88
USD/JPY 119.58 119.10 USD/NGN 199.3 199.0
GBP/CHF 1.4393 1.4255 S&P 500 2,070 2,055
USD/ILS 4.0118 3.9459 Oil (Brent) 56.52 55.73


The strong US growth momentum of Q2 and Q3 2014 appears to be moderating according to the Q4 data published at the end of last week, and when you add this to the global leading indicator data from Goldman Sachs, there are clearly some reasons to be concerned about the quarters to come. The suspicion is that cold weather and the appreciation of the US dollar will dampen the growth data in Q1 2015, so as things stand unless we see a strong consumption drive in the United States things might look a good deal less rosy in the next few months, despite robust growth in employment data – which, by the way, Goldman Sachs also suggests has peaked. This, of course, means that there might be less compelling reasons for US dollar strength going forward, but that only means that there is a weakening on one side of the ledger which argues for further dollar strength. Remember that with aggressive QE by the Japanese and European central banks, if the euro and Japanese yen are to continue their depreciation paths, the greenback will still have to do the heavy lifting. However, as I’ve often suggested, trends do not happen in straight lines, otherwise I would be on my super yacht sailing off to my private Caribbean island for the Easter break right now! Alas, but markets move in waves, and as things stand I believe that we are in for a few months of trendless markets. Only a substantial new low in EUR/USD could convince me otherwise at this point.


Election results in Nigeria have been delayed due to problems with the new voter identification technology. Technology, I should add, that the US Ambassador has proclaimed is better than anything currently used in the United States. That doesn’t mean that irregularities can’t occur, after all no system is infallible, but at the very least it should be more difficult, and it shows that the West African giant is moving in the right direction. Turnout, apparently, hasn’t been great and it’s possible that fears about Boko Haram and just the generally tense situation on the ground might have put off some potential voters, and indeed there have been some reports of violence in different parts of the country. However I’m not sure, based on historical comparisons, whether this has been worse than one would normally expect. We, like everyone else, will be forced to await the results, despite some of the claims posted on social media suggesting a landslide for the opposition candidate. We are not so naïve as to believe what looks like fairly crude propaganda when the body responsible for the count has clearly stated that they are still counting.


Some disappointing industrial production numbers out of Japan, but the forward looking data still looks constructive and when you add that to the less negative inflation numbers published in Spain than forecast, as well as better than expected retail sales data in other parts of Europe, there are reasons to believe that while the US might not be forging ahead quite as strongly as would have been hoped, the rest of the world is not nearly as gloomy as expected either.


Later on today we should get the Federal Reserve’s favoured inflation data, with very low inflation expected. And for the rest of the week we can look forward to some fairly significant data, not least Tankan in Japan and non-farm payrolls in the United States. Big things continue to be expected from the US employment data, if it disappoints this time there is a risk that the US dollar could be sold quite aggressively in my view. I would just like to further clarify my stance at this point… I do believe the US dollar will continue to strengthen over the medium term, it is not clear to me however, that in the short term the bullish trend is ready to continue. Time will tell!









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