20160428 – DAILY UPDATE

PRICES

Two major central banks have made their decisions over the last 24 hours, the US Federal Reserve and the Bank of Japan. One was roughly as expected, the other, perhaps not so much. I should add that there were other central banks – New Zealand and Brazil – who also made decisions, but of course those have to be considered less impactful on the global economy. They all left rates unchanged, albeit the rationales for their decisions varied.

 

FOMC – The statement showed that policy makers are less concerned about the global economy and systemic risk than in their previous meeting. This is not that surprising given the rally in stocks since the last meeting (see the chart of the S&P since the March 15-16 meeting).

20160428_spx

However they noted that recent data has shown a domestic economy in which growth has slowed a little and household spending has been lacklustre. There wasn’t any new statement elaborating on the balance of risks, whether external hazards or domestic positives, which might have shed some more light on their future decision making. It’s fair to say that the FOMC has left room to raise rates at future meetings, even June, but we would all be wise to keep a close eye on activity and inflation data between now and then. Another issue to be mindful of is the fact that the UK’s EU referendum will be close to the next scheduled FOMC meeting. If the outcome is uncertain it’s likely to influence Fed thinking in my view, Brexit could be a disaster for markets. In the immediate aftermath of the announcement dollar traded in the same range as it had before, but this morning it has weakened, which leads me on to the other major central bank announcement.

 

Bank of Japan – the rally in USD/JPY over the last few days in anticipation of the BoJ meeting was as a clear a sign as any that the market was expecting and even hoping for more stimulus in the face of an economy slipping back into deflation. We didn’t get it! Perhaps it might be too soon to call the whole Abenomics strategy into question, but some recent trends have been a blow to Prime Minister Abe’s growth programme. The BoJ looks to be relying on the recovering US economy, a stabilising Chinese economy boosting Japanese business confidence, he’s also betting that a stronger yen shouldn’t be as damaging for Japanese businesses as it might have been in the past. I have a lot of sympathy for the latter view, Japanese corporates have spent the last decade moving a huge chunk of their operations offshore, I’ve always suspected that the positive benefits of a stronger yen are at least a match for the negatives now. The only issue might be the negative impact of translation effects on earnings, and thus the Japanese stock markets. Anyway, the point is that the yen surged in the wake of the BoJ lack of action and other major currencies have gained ground on the dollar as well, although not to the same extent as the yen.

20160428_usdjpy

In terms of the bigger picture, I still look at the dollar as being in a corrective pattern, there’s ample room for more weakening, but the next major move in my view will see the greenback strengthen. It could be some time before that happens…

 

 

 

 

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

Follow us on LinkedIn ParityFX Plc

20160427 – DAILY UPDATE

PRICES

Core durable goods orders that came out yesterday for the United States are an example of the dilemma facing the Federal Reserve Board later on today as they complete their FOMC meeting to determine where US interest rates go from here. They weren’t impressive, month on month for March there was a slight decline of -0,2% versus February when numbers had fallen by 1.3%, compare this to economist forecasts of growth of 0.5%. There is definitely a case for the FOMC to consider caution, and to be honest no one really expects a hike later on today. As I mentioned yesterday some economists do however expect the FOMC to give themselves room to hike in June, and they could well do, the more forward looking data like the PMI surveys are indicating improvements, even if the backward looking data has not. But that could be dependent on a visible improvement in the data.

 

This morning UK Q1 2016 GDP has just been published, it’s a slightly better than forecast, and the same 2.1% growth we saw for Q4 2015.  But the quarter on quarter number is actually weaker that the Q4 2015 one, albeit in line with expectations. The Chancellor, George Osborne, has already weighed in blaming Brexit fears for the quarterly weakening. He probably has a point. The pound recovered some of its early morning losses on the back of the announcement. At the moment I tend to pay little attention to UK economic data because it’s not really driving the currency. Brexit and the well known Bank of England stance that rates aren’t going up at all in the near future are the dominant themes for now. It wouldn’t surprise me if fears about Brexit start to recede as the government and the ‘Stay’ campaign ramps up, the big boys are starting to get involved and when you have heavyweights like the US President on your side, it provides a sort of a headwind. But we still have a long way to go, as the say…”a week is a long time in politics”.

 

The recovery in the oil price continues, personally I’ll only start to get excited if we see prices exceed the last reaction high which is at 54.30. Looking at that weekly chart below we are still very much in a bear trend, and a higher high is a prerequisite if the dominant trend is to be called into question. I remain sceptical as the fundamentals don’t really support a sustained lift in the oil price. The price recovery has at least reduced the risk of further systemic damage from indebted oil companies, but a recent report does suggest that the ratings agencies are behind the curve in terms of downgrades for oil dependent sovereigns.

20160427_oil

Still, the recovery has been beneficial for economies like Nigeria, at least in so far as the wild depreciation we saw at the start of the year has stopped and we are seeing definite signs of stability. It’s worth pointing out that if the Nigerian government’s search for loans is successful they will use the dollars (or other currencies) they’ve borrowed to purchase naira, this could provide a short term boost and see USD/NGN lower at some point in the year, but don’t count on this being the start of something longer term. No doubt there is pent up demand for imported goods in Nigeria now, even though the emptier ports belie the fact. The 300 level is here to stay and we should get used to it!

20160427_usdngn

 

 

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

Follow us on LinkedIn ParityFX Plc

20160426 – DAILY UPDATE

PRICES

As we head into this week’s FOMC, the chief economic adviser at Allianz SE, Mohamed El-Erian, has suggested that the meeting will most likely set the scene for a June rate hike. Not everyone agrees though, with quite a few economic strategists suggesting that the data since the last FOMC meeting has shown evidence of weaker domestic growth and softer inflation. So why hike so quickly? On balance, I tend to side with the former view, not the latter. This is because I suspect that normalisation is still a key priority for Fed Chair Yellen and being able to achieve this with the lowest possible terminal rate level means that you hike more proactively. The bottom line is that disappointing though the data has been it hasn’t been terrible. Global risk sentiment has recovered strongly since the beginning of the year; Chinese data has stabilised and in some cases shown signs of improvement; and throughout it all the US labour market continues to grow at a solid pace. It wouldn’t take much for inflation pick up, and central banks hate having to chase inflation. The only problem is that there’s one thing central banks hate more than being behind the curve, having to admit they were wrong and reverse their policy trend. That’s the risk on the other side that some FOMC members fear… the doves will say that to hike too soon could result in having to make cuts if the global economy turns out to be much weaker than feared. Everyone remembers the ECB’s embarrassing retreat at the onset of the global financial crisis, and no one wants that.

 

So what does this all mean for currencies, and specifically the dollar? From the recent price action it’s clear that the market doesn’t think the Fed will hike this week, in fact it looks like long dollar positioning is being unwound in front of the announcement. There are other factors involved though, in the case of cable (GBP/USD) the market got very short sterling and looks to be in retreat now, and as I mentioned recently, USD/JPY has bounced in the face of the dual threats of a dovish FOMC and the BoJ meeting to follow. Looking at GBP/USD I’m not sure we go much higher than where we are. Perhaps we get up to 1.48, but the case for a weaker pound sterling remains with Brexit risk looming. From a technical standpoint we could be doing an ‘A-B-C’ higher, equality in the move takes GBP/USD up to 1.4680. It is clear from the weekly chart below that GBP/USD remains in a bear trend and we are currently experiencing a counter-trend move. We would need to see GBP/USD climb much higher than this to call that into question…

20160426_gbpusd

 

 

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

Follow us on LinkedIn ParityFX Plc

20160425 – DAILY UPDATE

PRICES

This is a big week for data with the central banks of both US and Japan making interest rate decisions. As the Financial Times characterises it, you could think of it as yet another episode of the ongoing global currency wars, with a race to see which central bank can manage their currency down. Obviously it’s a zero sum game, as for one currency to weaken another needs to strengthen. It’s interesting to note that the FOMC will actually be on Wednesday with the BoJ following on Thursday morning, which should give the Japanese a chance to react to the decisions and statements made by FOMC officials. This becomes particularly relevant when Kuroda the BoJ governor recently pointed out that the Federal Reserve’s less hawkish stance this year might be part of the reason for the swift appreciation of the Japanese yen so far this year. No doubt the BoJ will be hoping that the more positive risk environment of the last few weeks will give the Federal Reserve the room to sound more upbeat about the US and global economies, and thus put interest rate rises back on the agenda. This would probably do as much to halt the collapse in USD/JPY than almost anything the BoJ will be able to do. I say this because explicit attempts to halt yen appreciation would not be politic given discussions between Japanese officials and their US counterparts in a recent meeting in Washington. Given Governor Kuroda’s ability to surprise market watchers it’s not surprising that this week will likely see a lot of volatility and perhaps it started on Friday’s (see chart below) big jump in USD/JPY. The fact that equities are just a bit softer at the start of this week is a further sign that some caution is creeping in before the big announcements.

20160425_usdjpy

Elsewhere EUR/USD has made lower lows and lower reaction highs which could be taken as a sign of an imminent decline, but I wouldn’t want to be the boy who cried wolf too often. At the very least the 1.1050 area needs to be breached before things get interesting in my view. For now the dollar looks to be in retreat, and only a significant change in FOMC opinions is likely to alter the short term trend in my view. I guess we’re all waiting to see what they say on Wednesday.

 

 

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

Follow us on LinkedIn ParityFX Plc

20160422 – DAILY FX COMMENT

Morning

  High Low     High Low
EUR/USD 1.1309 1.1263   USD/ZAR 14.38 14.24
GBP/USD 1.4369 1.4312 GBP/ZAR 20.62 20.45
EUR/GBP 0.7888 0.7856 USD/RUB 67.10 65.73
GBP/EUR 1.2729 1.2677 USD/ILS 3.7862 3.7562
USD/JPY 110.75 109.25 S&P 500 2095 2083
GBP/CHF 1.4012 1.3945 Oil (Brent) 45.12 44.40
GBP/AUD 1.8546 1.8444 Gold 1252.0 1243.0

NOT very good Retail numbers yesterday, remember from my comments Economists were predicting -0.1% fall….well it came in at -1.3% MoM (march) while YoY dropped from +3.6% to +2.7% …not surprisingly GBP (USD) took a cold bath and was sold off aggressively. As I mentioned yesterday (oh and thank you to those who liked my comments on LI) staying in the EU is simply a must if we are to enjoy the fruits of a single market.

I might not agree with (some of) President Obama’s foreign policy, but I certainly do agree with his comments yesterday that the UK MUST stay in the EU. The President warned that a vote to leave the EU will leave Britain less able to tackle terrorism, the migration crisis and any economic shocks in the global economy. I completely agree. We are STRONGER as a UNIT than as an island!!!

This is what makes me wonder what Boris and Gove are getting at. Yes it costs money to be a member and yes it’s a lot (which could be argued could be better spend at home)…but the negatives are simply too much to ponder. PM David has and is doing a sterling job at trying to negotiate a better deal with the EU and I am sure he will succeed and get the UK better terms of trade. However this will and does take time, time he has and which is why we all voted for the Conservatives.

Have a good weekend

 

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

Follow us on LinkedIn ParityFX Plc

 

20160421 – DAILY FX COMMENT

Morning

  High Low     High Low
EUR/USD 1.1307 1.1286   USD/ZAR 14.28 14.18
GBP/USD 1.4357 1.4319 GBP/ZAR 20.49 20.27
EUR/GBP 0.7890 0.7866 USD/RUB 69.57 64.17
GBP/EUR 1.2713 1.2674 USD/ILS 3.7767 3.5787
USD/JPY 109.90 109.56 S&P 500 2110 2100
GBP/CHF 1.3944 1.3907 Oil (Brent) 45.98 45.07
GBP/AUD 1.8406 1.8346 Gold 1260.0 1242.0

The Pound seems to have “calmed” after a few weeks of rumours and sell offs following the good and bad news from the STAY AND GO EU camps. Suffice to say regardless of your own opinions as to whether we should in fact stay or go, the facts do speak volumes. From the IMF, EU, US and our own Conservative Party (the majority I would like to think) the benefits simply outweigh the cons on staying in the EU. The political fallout not to mention the financial impact of leaving the EU will be felt for generations. And then there is the small issue of the value of the GBP. Be rest assured, if you cross the LEAVE box in June, your holiday to a foreign destination will jump by 15% not to mention the cost of importing raw materials for manufacture. In other words, just about everything that has a foreign input in their goods for sale locally will jump in price and that includes the cost of filling your car/van/scooter/plane/train and bumper car. So be warned, you will be FAR WORSE OFF if we leave the EU. That is fact.

Today we see the UK core Retail Sales numbers published. Last month saw a drop of 0.4% and this month, economists are predicting a fall again but only of 0.1%….needless to say, a fall is a fall and giving the BoE further headaches. Yesterday we saw the Unemployment number published at 5.10% and wage growth (lower) at 1.80%…again another important indicator for the BoE…As you are well aware the BoE have repeatedly said for a rise in interest rates there needs to be growth in wages and CPI (Inflation) neither of which are going anywhere fast. So rates will and should remain at 0.50% for the coming months – of course the results of the EU referendum will be interesting to say the least as the value of the GBP and general sentiment will affect the GBP massively.  I for one will be very worried if the LEAVE vote wins because of the financial fallout that will ensue. This vote like the Scottish vote, will have monumental repercussions either way.

No change expected at the ECB meeting later today, other than the normal rhetoric that they are doing everything they can to prop up the EU economy. Good luck with that!!! Nevertheless the EUR is being propped up as the US economy slows as confirmed by the FED who of course announced they are only likely to raise rates twice in 2016…..

Emerging economy currencies, like the S.African ZAR has enjoyed a wonderful rally in recent weeks propped up by the climbing EUR. Locals telling me that foreigners continue to buy local bonds (R2bn yesterday). Be careful though, because a further fall in the EUR(USD) this morning and we could see ZAR longs cutting positions on profit taking. Additionally SA inflation was reported yesterday with headline inflation falling to (on expectation) to 6.30% from 7.00% while core inflation fell to 5.40% (below the 6% upper band)…..as such and given these recent favourable moves in the ZAR and inflation, rates have probably reached their “limit” for now.

 

 

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

Follow us on LinkedIn ParityFX Plc

20160420 – DAILY UPDATE

PRICES

Risk on is the name of the game, and the tone seems to be strengthening. Over the last year positive risk sentiment has meant a stronger dollar, and I still believe that should be the case, but right at this moment the dollar doesn’t seem to be getting much traction, even against the Brexit infected pound sterling. It’s easier to understand what’s going on with a currency like the Australian dollar which is up over 14% since the year-to-date lows in mid-January (see below), the recovery in commodities and risk assets generally is all the explanation you need for AUD/USD.

20160420_AUDUSD

The question has to be… is further positive risk sentiment going to adversely impact the dollar? I rather suspect at some point the greenback will regain leadership, but only after the market comes to believe that the global recovery is sustainable and the world can cope with higher interest rates. Perhaps it will take a few months of solid data in the United States and no disastrous data out of China, before the market starts to assign higher probabilities to more rate hikes sooner, thus allowing the dollar to start appreciating again. The bottom line is that risk should continue to rally as long the Federal Reserve keeps pace with the assumptions the market is making. Should the time come when the FOMC indicates that they have a more aggressive hiking cycle planned than the market believes, then risk sentiment will turn negative again, but first the dollar will probably spike. For now this is more to do with recovering risky assets than the greenback.

 

 

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

Follow us on LinkedIn ParityFX Plc

 

20160419 – DAILY UPDATE

PRICES

Risk sentiment continues to improve with S&P 500 now trading above the key 2100 level. The next target is the early December reaction high at 2116, which is also the level of the downward sloping resistance trend line demarking the lower highs since the ultimate peak last summer. It’s hard to imagine that record highs aren’t in front of us in the coming months.

20160419_spx

Quite a turn around since panic at the start of the year, and a complete contrast to the doom and gloom mongers at institutions like the IMF. Why would equities be climbing like this if the global recovery is stuttering? If the global recovery is still intact then at some point a reassessment of the Fed outlook and the hiking cycle in the United States is inevitable and it’s interesting that Rosengren, seen as one of the most dovish voters at the FOMC, has opined that the market could be underestimating the health of the US economy. And therefore the likely path of interest rates. I quote.. “The very shallow path of rate increases implied by financial futures-market pricing would likely result in an overheating that necessitates the Fed eventually raising interest rates more quickly than is desirable, which could endanger the ongoing recovery and continued growth” (Bloomberg).

 

Elsewhere there are signs that the macro news is getting better, at least in the short term. I was stunned to read, in the Financial Times, that house prices in leading cities are up 63% year to date, albeit they are falling in smaller cities. This should give a boost to activity in these major cities that will be of benefit to the Chinese economy in the short term. Although it feels like it’s just storing up more problems in the longer run. Perhaps we can hope that in the long term other economic regions around the globe pick up the slack and permit China to continue it’s much needed economic restructuring.

 

The dollar looks a bit weak in early trading today, but I can’t help feeling that the more positive the economic news we get, the more likely expectations of a more hawkish Federal Reserve will start to boost the dollar.

 

 

 

 

 

 

 

 

 

 

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

Follow us on LinkedIn ParityFX Plc

20160415 – DAILY UPDATE

PRICES

 

The one key takeaway we get from the much anticipated Chinese GDP data release is “stabilisation”. Q1 2016 GDP came in as expected in China, at 6.7%. Down a smidge on the Q4 2015 number (6.8%), but well within the forecast range of the Chinese government. It seems that rebalancing the economy is taking a backseat for a while as the government struggles to alter what was starting to seem like a dangerous looking downward trend. In the long term however the reliance on construction and heavy industry is simply not sustainable and the government knows it. The plan remains to try to move the Chinese economy towards a more services oriented consumer economy. That is a goal that will take a generation to achieve however.

 

The IMF have done it, even President Obama has done it, and yesterday the Bank of England did it as well adding its voice to the clamour warning about the risks to the UK’s global standing and the likely negative impact on the economy should Brexit happen. As expected yesterday the MPC was unchanged in its view that rates should remain on hold with all 9 members voting to hold. The Bank believes that fears about Brexit are already dampening economic activity in the UK. This has not pleased those in charge of the ‘Leave’ campaign who claim that the Banks intervention was political. This is patently false as the UK central bank has a duty to discuss any issues which are likely to impact the British economy. It seems like inflation is not even a part of the discussion at the MPC seeing as at the margin prices look to be picking up in the UK. We are seeing a similar phenomenon in the Eurozone based on recently published data, while funnily enough, in the US, the economy most likely to raise rates inflation has slipped back.

 

Meanwhile sterling has remained under pressure versus the US dollar. Truth to tell most currencies have been under pressure against the dollar this week. Sterling has actually held its own against the euro in recent days, as the euro has fallen more quickly against the dollar. I suspect this should be looked at as more of a counter-trend move for EUR/GBP. We continue to expect sterling weakness in the face of Brexit.

 

 

 

 

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

Follow us on LinkedIn ParityFX Plc

20160414 – DAILY UDPATE

PRICES

 

The dollar made a strong comeback yesterday and is off to a solid start this morning. Perhaps it’s too soon to call a turn, but this could be a return to trend. For starters I would need to see EUR/USD below 1.11 and GBP/USD back down below 1.40 before raising my conviction level. The pace of the decline in cable so far and we could see that by the end of the week.

 

Later on today we have the MPC in the UK, we don’t expect any surprises with all members voting for rates to remain on hold. We also get Eurozone and US CPI numbers, and some consumer confidence data in the US. It will be interesting to see if we get more positive surprises.

 

Nigeria appears to be on a borrowing binge, which raises fears that we are going back to the bad old days. There’s nothing wrong with borrowing of course, as long as the money is used effectively. That’s the open question at the moment. It’s been a less than auspicious first year from President Buhari, the jury is still out. Inflation is rising, there are queues at petrol stations in Africa’s largest oil producing nation. Things need to change.

 

Finally on Friday we’ll get Q1 GDP numbers out of China. That alone could alter sentiment one way or another. A strong number could see the dollar continuing to rally, and it would certainly see equities push up to new year-to-date highs. Watch this space.

 

 

 

 

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

Follow us on LinkedIn ParityFX Plc