High	Low			High	Low
EUR/USD	1.1213	1.1176		USD/ZAR	11.7801	11.7034
GBP/USD	1.5399	1.5354		GBP/ZAR	18.11	18.01
EUR/GBP	0.7288	0.7274		USD/RUB	63.13	61.94
USD/JPY	120.27	119.56		USD/NGN	202.6	199.3
GBP/CHF	1.4777	1.4691		S&P 500	2,117	2,113
USD/ILS	4.0113	3.9800		Oil (Brent)	60.76	59.45

 

I spy with my little eye, a greenback getting stronger. The signs are there in big levels being quietly surpassed. I see it in USD/ILS trading above 4.00, in USD/JPY trading above 120.00, USD/MXN trading above 15.00 and I wait patiently for the time in the very near future when USD/BRL trades above 3.00. None of these levels I’ve indicated are necessarily psychological (or have indeed sustained), but they do have some significance. When they are all quietly occurring without us making much of a big deal, it tells you something about the manifest destiny of the US dollar. I have noted for some time that the world’s reserve currency has been consolidating after the strongly bullish trend of the second half of last year. Well.. here we are in the 3^rd month of this year, and something tells me that the trend might be about to gather strength again. Listen, I could be wrong, but the ‘across the board’ strengthening of the US dollar seems almost tidal in its ubiquity.

 

Some solid data this morning. German retail sales are surging to the fastest pace in 7 years, and for all the difficulties a super strong currency represents, GDP growth in Switzerland has continued to maintain a steady pace, confounding economist expectations of slightly slower activity, still… to be clear this GDP number is prior to the recent de-pegging. But that’s not all, Portuguese unemployment is falling, with the number in January down to 13.3% compared to 15% previously. Indeed, taken as a whole there has been an improvement in employment across the Eurozone in the last few months. Back in your box doomsayers! On the other side of the world, only rampant house prices in Sydney appeared to stay the hand of the Australian central bank (RBA) from cutting rates further, although they did indicate that further cuts are likely. Despite its strong performance today, I don’t believe the Australian dollar will be immune to power of a move back into a US dollar trend.

 

As we mentioned in yesterday’s blog, the US employment data will be of huge interest later on this week. Another strong number could set the market off to re-pricing the likelihood of interest rate hikes in the United States, and that would have knock on effects on a wide variety of asset prices. Currency markets might be the only place where there is a decent attempt being made to discount a more hawkish Federal Reserve!

 

For now though risk sentiment is solid, the Nasdaq Composite is now trading above 5,000 – levels not seen since the dotcom bubble burst – and as I mentioned recently the MSCI World Index trades at record highs. I suspect it will take something big to shake up all this good feeling. I for one don’t expect anything in the near future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DISCLAIMER

Any financial promotion contained herein has been issued and approved by ParityFX Plc (“ParityFX”); a firm authorised and regulated by the Financial Conduct Authority (“FCA”) as a Payment Services Institution with registration number 606416.  It is for informational purposes and is not an official confirmation of terms.  It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to.

Opinions expressed are subject to change without notice and may differ or be contrary to the opinions or recommendations of ParityFX. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. To the extent permitted by law, ParityFX does not accept any liability arising from the use of this communication.

 

Follow our tweets @parityfxplc

Good day

	High	Low			High	Low
EUR/USD	1.1241	1.1159		USD/ZAR	11.7560	11.6455
GBP/USD	1.5442	1.5385		GBP/ZAR	18.10	17.94
EUR/GBP	0.7300	0.7238		USD/RUB	62.70	61.46
USD/JPY	119.97	119.58		USD/NGN	202.7	202.0
GBP/CHF	1.4762	1.4678		S&P 500	2,111	2,102
USD/ILS	4.0089	3.9667		Oil (Brent)	62.60	61.15

Just goes to show how quickly global financial issues go from page 1 to page 20 in the newspapers and TV. For the past fortnight Greece was on everyone’s lips and typewriters. Now, I do not see much written or spoken. Granted the “agreement” is in place and the Greek’s have provided the EU/ECB/IMF with a list of austerity measures to maintain the cash flow. What we did see last week were a revival of demonstrations in Greece, this time demonstrating against the Syriza party for accepting Troika’s demands. No disrespect meant, but are the people that demonstrated living on the same planet as you and I? Do they not realise that this is not simply a case of saying no no no to Troika’s demands and countering them with this is what “we” want and there is no chance to debate it. Had the agreement not been agreed, the local banks would be out of cash and all those wonderful people throwing stones would have seen their money simply vanish. After all just because you have money in the bank doesn’t guarantee its safety. Over €1bn was being withdrawn daily before the deadline. I can assure you it would have been a great deal more than that had the talks failed. Greek citizens need to realise that the level playing field has changed and as such their “rights” are no longer taken for granted. They need to toe the line, cut their cloth according to their means and fall in line with the rest of the EU. Failure to comply is simply not an option. So change is in the air in Greece, and it will be interesting to see how successful Syriza are in implementing their reforms.

I just returned from Spain and had the pleasure of meeting up with large estate agents and businessmen who have been based in the Costa (Del Sol) for over 20 years. They commented that the authorities there have come down on property owners and businesses like a ton of bricks. Taxes are being collected, every industry is now under the microscope and even the corner vendor selling cheap cigarettes is being raided to avoid paying taxes. No doubt the old days of getting by are behind us and a new dawn is upon us. The authorities whether in Spain or Greece have a simple mission, collect taxes, reform labour laws, catch tax evaders and generally to clean up their backyard. This is only the start of things and changes to come.

This week all eyes again on NFP (Friday 1.30pm). The NFP data is likely to confirm yet another solid month of job gains that will leave open the prospect of the FED raising interest rates for the first time since 2006. Just like in the UK, the FED will be looking at the growth in average earnings. The 0.5% gain last month is expected to be followed by a 0.2% gain this month, rising over the course of the year to between 0.30/0.40%. As Gov. Carney of the BOE commented recently, growth in wages is CRUCIAL to determining when rates will be on the rise. As is the case on both sides of the pond (not to mention globally pretty much) with the recent fall in gas and energy prices,  households have seen a boost to their real incomes. These rises will be key factor which supports personal consumption and gives the FED the confidence to believe US economic growth is becoming more sustainable. So Friday’s report will in effect support the FED’s decision on rates and as we at PARITYFX have concluded these rate rises could come as EARLY as May (surprise move) otherwise at the June (17th) meeting. Needless to say the USD will remain Buoyant and supported on the back of this anticipated rate rise. As far as the ECB/BOE/RBA/PBC (to mention but a few), the rise in the USD is probably a GOOD thing for their own economies as it makes their goods MORE attractive to others (i.e., exporters 1, Importers 0).

No doubt we are slowly heading to a period of higher interest rates. The “free lunch” is about to come to an end!!! Be prepared

DISCLAIMER

Any financial promotion contained herein has been issued and approved by ParityFX Plc (“ParityFX”); a firm authorised and regulated by the Financial Conduct Authority (“FCA”) as a Payment Services Institution with registration number 606416.  It is for informational purposes and is not an official confirmation of terms.  It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to.

Opinions expressed are subject to change without notice and may differ or be contrary to the opinions or recommendations of ParityFX. Unless stated specifically otherwise, this is not a recommendation, offer or solicitation to buy or sell and any prices or quotations contained herein are indicative only. To the extent permitted by law, ParityFX does not accept any liability arising from the use of this communication.

Follow our tweets @parityfxplc