Crude oil futures fell in early trade on Wednesday as the U.S. dollar held around three-week highs and industry stocks data indicated a build in U.S. crude inventories.

South Africa’s rand weakened against the dollar on Tuesday, with investor caution over a political row involving the country’s finance minister hanging over the markets.

Nigeria’s central bank sold around $1.5 million at the interbank forex market on Tuesday to support the local currency and ensure the closing rate settles after a torrid week. A militant group said on Tuesday it attacked a pipeline operated by a subsidiary of Nigeria’s state oil company in the country’s southern Delta region, just a day after the most prolific rebel group in the restive energy hub said it had halted hostilities.

Kenyan shilling was stable against the dollar on Tuesday with demand coming from importers and manufacturers expected to put pressure on it, traders said.

All quiet on the Western front. Investors and traders sit on the sidelines trading in a range as we await quite possibly one of this year’s most eagerly awaited NFP report due Friday. The report will rubber stamp the FED’s decision whether to hike rates in September or not. FED Vice Chairman Stanley Fischer noted yesterday that the pace of future FED rate increases will depend entirely on the economy’s performance (seems the FED are changing their stance slightly in that they earlier indicated rate hikes are not only US data dependent but also dependent on China, the EU and Brexit fallout). Fischer also said the U.S. economy appears to be on a 2% growth pace and heading toward full employment, and said the strength of the dollar wasn’t an issue for now. Fisher further hinted if Friday’s payrolls report is reasonably in line with expectations, it could clear the way for one, or possibly two, Fed rate hikes by the end of the year.

For this reason as I have noted above Friday’s NFP number is a real GAME CHANGER. IF the number is strong (250k+) the FED will probably hike rates in September and in turn set about changing the course of the USD for the coming months. A rate hike in December is then a formality one should think unless of course there is a Republican President in office in November. Make no mistake, should “the Donald” win the election in November it will set about all sorts of mayhem in the financial markets as we await his economic policies. The fear of the unknown is giving traders some serious food for thought and has led to investors pulling billions of USD from funds. While some people might not agree or like Ms Clinton, truth is she is the safer bet. Look at what happened to the UK on the 23^rd June, we all thought people would never vote to leave given the fear of the unknown. Well how wrong we all were. The US elections will be no different, anything is possible.

As far as the UK and the GBP is concerned, PM May is meeting her MP’s at Checkers today to discuss Brexit and the consequences and more importantly when to invoke Article 50. However that appears to be heading for the Supreme Court as a group of individuals want Parliament to vote on Brexit and Article 50. Rocky times ahead for the GBP I have to say. Still I am hopeful things will stay the same for the next few years as negotiations take place and we have a template for the UK outside the EU.

I AM VERY WORRIED!!!

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; and at www.parityfx.com

Oil futures edged up on Tuesday as the U.S. dollar erased earlier gains, but doubts that producers would be able to agree to an output freeze continued to drag on prices.

South Africa’s rand weakened against the dollar on Monday as the greenback rose on expectations that U.S. interest rates would rise soon, adding pressure on the currency which has been knocked by concerns over the finance minister’s future.

Nigeria’s currency market registered $327 million worth of trades on Monday, about six times more than its usual volume, the market regulator told Reuters. A Nigerian militant group, which has claimed responsibility for a series of attacks on oil and gas facilities in the southern Niger Delta energy hub in the last few months, said on Monday that it had halted hostilities.

Kenya’s shilling was steady on Monday and traders said it was seen weakening due to anticipated dollar demand from sectors like energy.

Very interesting comments indeed by Pres. Yellen of the FED on Friday at Jackson Hole. Her sheer confidence was exceptional (we know she wants to hike rates sooner rather than later) despite the calls by her fellow members to wait. Yellen noted “in light of the continued solid performance of the labour market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months”. What seemed to be missing though were he concerns about the global economy namely, the sustainability of US labour market, Chinese growth and the fallout from Brexit. I have agreed with the FED members who have called for just 1 rate hike (to come) in December. Yellen appears to be calling for September and December. I think this Friday’s NFP report will be that much more important as it will indicate just how healthy the US labour market is following July’s +287k and August +255k. Anything in that region will probably sway the FED to raise rates on the 21^st September and then again 14^th December (assuming the labour market continues to shine). What does surprise me is Yellen appears to be going it alone and not worrying about external shocks from the slowdown in China and the yet to be determined fallout from Brexit. Truth is no one quite knows how things will turn out once the negotiations start on Brexit. What we do know is local companies that are importing have hiked their prices following the collapse in GBP. An article in the FT has confirmed this as companies pass on the increased costs (of importing) to their customers. Exporters on the other hand have had a field day and one can only surmise that the current account will balance up via higher receipts for exporter’s vs higher costs for importers.

The USD did what we expected following Yellen’s comments and rose vs the EUR (trading sub 1.12 now) and GBP (sub 1.31) – GBPEUR remains range bound 0.85/0.87 (1.1500/1.1765). PM May has summoned her MP’s and told them to embrace Brexit and accept that the people have spoken. Labour’s candidate Owen Smith has recently commented that should he win he will push for another referendum. He also stated that Corbyn’s total lack of care during the referendum was because (behind the scenes) he wanted Brexit and probably voted Leave. No wonder he was not passionate like Blair and Brown and Darling calling for a Remain vote by labour supporters. While I am clearly a Conservative, if Corbyn stays Labour’s leader it is quite possible UKIP and Lib Dems could become the new opposition party in parliament. Not a bad thing then if you are a Conservative …

So for the rest of the week….EUR/USD and GBP/USD likely to trade southbound. In other words, USD maintains the “upper hand” ahead of NFP on Friday.

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; and at www.parityfx.com

Headlines:

Oil prices dipped in early trading on Friday after the Saudi energy minister tempered expectations of strong market intervention by producers during talks next month.

South Africa’s rand weakened further to a one-month low on Thursday, weighed down by lingering uncertainty over whether the finance minister faces arrest.

Nigeria’s naira was quoted at an all-time low of 409 to the dollar on the black market on Thursday, compared with 402 the previous day, after the suspension of some banks from forex trading made dollars even harder to obtain.

Kenya’s central bank pumped dollars into the market early on Thursday, helping to lift the shilling, after it weakened on the back of President Uhuru Kenyatta’s decision to approve a law capping commercial lending rates, traders said.

All eyes on today’s Jackson Hole meeting where Pres. Yellen of the FED will speak to global Central Bankers. I imagine she will reiterate the importance of stable markets and maintain their vision for a global economy pre 2008. In other words she will probably make some mention about US rates and whether they are going to rise or remain static in September. Of course as a Central Banker and amongst Central Bankers, the rhetoric will be coded by the NSA (that’s the National Space Agency not the Security Agency) because that’s how these bankers like to talk to each other. Then you have the traders, strategists and economists who will then try to make heads or tails and trade against that. So really tonight is very important indeed as far as US interest rates are concerned and will dictate the next direction for the USD (and GBP as a result). The FED futures market is currently pricing in a 57% possibility that the FED will hike rates in December. September currently sits at around 30%…

The GBP as a result has traded strongly (if you can call a 1.32 handle strongly) over the past few days ahead of tonight’s talk. We have in the past few moments dipped below 1.32 handle but its negligible. I think if there is a delay in hiking in September this could and should push the GBP up a big figure and then see what happens. I know I am going against the tide, but something tells me the GBP is due a BIGGER correction.

Have a great (long) 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; and at www.parityfx.com

Let’s start with some headlines:

Oil prices fell over 1 percent on Tuesday, with Goldman Sachs warning that August’s price rally had been overdone and that a proposed oil production freeze at current near-record levels would not help rein in an oversupplied market.

South Africa’s rand continued its retreat against a strengthening dollar on Monday, as rekindled expectations of a near-term rate rise kept investors cautious.

Nigeria’s naira closed firmer on the interbank market on Monday after the central bank sold dollars to some commercial lenders towards the end of a session that featured no trades in the first four hours, traders said. Nigerian President Muhammadu Buhari will ask parliament for extra powers for one year allowing him to take “emergency” decisions to revive the flagging economy, a government source said on Monday. Hotel and gaming group Sun International has become the latest South African business to pull out of Nigeria because of weak economic growth and clashes with regulators and shareholders in the West African country.

The USD continues to retreat today as speculation gathers steam that this Friday’s talk by Pres. Yellen at Jackson Hole will kinda confirm that there is indeed an increasing likelihood that the FED could delay hiking rates in September. I wrote about this subject in detail yesterday and while I think the FED should delay hiking rates, their actions will be vastly different (in how they analyze the US economy and the fallout from a further rate hike). We know there are FED members who want to delay a rate hike, but I think Pres. Yellen is keen to hike rates and get a move on with the US economy. She is determined to hike rates because she feels the US economy will be better off with higher rates. That way if they do encounter a rough patch they will have scope to cut rates should there be a need. Granted another 0.25% hike will be neither here nor there, but it is the global economy that you need to consider strongly. The UK has shed 2% of GDP since Brexit, the EU is well the EU and nothing changes (though we did see stronger French and German PMI numbers this morning which is encouraging) and finally China is on her knees (if you can call GDP at 6.80% on her knees). So you see when the FED decide on whether to hike or not in September best they read my comments above and know it is too soon.

The GBP has had a super 48 hours rallying above 1.32 at one point this morning. This is NOT a GBP thing it’s a USD thing. The EURUSD continues to trade over 1.13 handle all because of the will they won’t they hike rates in September. I wrote yesterday that I think there is good reason for the GBPUSD to rally potentially as high as 1.40 given that things have not necessarily been “that bad”. What we have to look at are the BoE gilt issuance and the value of the GBP makes a big difference not only to the value of the bond but also the repayments. With Inflation at 0.60% and prices rising heck, what is stopping inflation hitting 1% by year end and potentially a UK RATE HIKE!!! Anything is possible and my gut tells me something is brewing in GBP land. A delay in September by the FED to hike rates could be the strike that sends the GBP back to more “respectable” levels. Anyway that’s my opinion

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; and at www.parityfx.com

After the yo yo effect last week following the inconclusive FED minutes, we started the week on a USD down day. I am not too surprised to be honest as I have been saying if the FED stick to what they have told us they will delay hiking rates. But what they tell us and what they do are quite simply 2 very different beasts. You see Pres. Yellen and her board members are obviously not in agreement about US rates and whether they should in fact be hiked in September. Personally if I was a board member I would vote to hold for now especially with the Nov US elections just around the corner. We should hopefully get a little more colour later in the week when Pres. Yellen speaks at Jackson Hole (to global Central Bankers). While I am sure she will dangle the carrot I doubt it will be edible. In other words, she will keep her cards close to her chest and let us keep guessing whether or not they hike or not. The data in the US has been ok and shows continued signs of an economy that’s in ok shape, however the same cannot be said for the EU/China and the UK. In fact the global economy is now facing a situation where the former is outpacing the latter group and that is no fun at all. It is for this reason I think we will next see a rate hike in December as intimated earlier this year. There is no rush. But having said that and having mixed with Central Bankers I kinda see why and how they would vote to hike rates in September. After all how much “damage” could a 0.25% hike really have….erm, lots!!! But they know that. So while the FED are split I think Pres. Yellens casting vote could in fact swing it her way (hike) and then sit back and see how the domino’s fall.

What this all means is if we do see a rate hike the USD will move like a bullet train on the back of asset allocation as traders and financiers move their assets heavily in favour of the USD. The hike would be a real boost signalling things are ok and the global economy can withstand and absorb a 0.25% rate hike. As far as the GBP is concerned, if you shut your eyes and sold the GBP when you walked in this morning and then opened them and decided to “take profit” I am afraid to say there would be none. The GBP dropped 60pips through the day and is back to trade around the opening levels. Seems Europe likes to sell the GBP and the US likes to buy it. Unless something silly happens over the coming days, all eyes will be on Friday and Pres. Yellens speech. So I think for this week the GBP will drive in a range between 1.3000 – 1.3200 awaiting further news on Brexit and Yellen.

Talking about Brexit, I mentioned Friday that negotiations will commence in 2017 (July onwards) and I guess someone in Whitehall must have read my blog because we now know that there is a big chance of that in fact happening. A year to get their ducks in a row and a year to prepare for “war”. The EU are unlikely to cede to the UK’s desires on trade and migration. The UK will try to muscle their way through the negotiations but if the Canada/EU negotiations are anything to go by I think this will be a game of chess. I wonder who will blink first.

Financiers businesses individuals and traders are all coming to terms with the new GBP rate. Before I go let me throw this at you. All the reports I am reading these days are saying that the catastrophe that will ensue if the UK voted OUT are actually not as bad as it appears. Stocks are at near year highs, businesses have not reported a collapse in trade and have simply passed on higher costs to the consumer who is happy to pay regardless. Inflation has ticked up as a result of increasing prices (to the satisfaction of the BoE). Granted the UK’s GDP is not into the 2% mark we have been accustomed to, but hey even at 0.60-0.8% I guess we can live with that. SO my question, if things are not as bad as they appear why can’t the GBP rally say back to 1.3500-1.38-1.4000 until the negotiations actually start. DO you see where I am going with this!! Funnier things have happened. Be prepared for the unexpected.

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; and at www.parityfx.com

The minutes from the FOMC were on the whole a “non-event”. Non-event in that there was not much information to confirm one way or another how the FED/FOMC will act on the 21^st September meeting. In fact there are some members of the FOMC who are now saying it is too early to raise rates again given the slowdown in China and Brexit consequences. How right they are!! While NFP for July showed solid employment growth I believe the FOMC members should be patient and wait for further strengthening activity from the US/China/EU and UK. The minutes stated that “regarding the near-term outlook, participants generally agreed that the prompt recovery in financial markets following the Brexit vote and the pickup in job gains in June had alleviated two key uncertainties about the outlook that they had faced at the time of the June meeting.” In other words the members were not willing to stick their necks out and give the US economy the all-clear for the September rate hike.

The result of the minutes sent the USD into somewhat of a freefall sending the EURUSD above 1.13 and GBPUSD 1.31 (GBPEUR back from the abyss to trade circa 0.8625/1.1600). I think over the coming weeks we are likely to see much of the same with the greenback trading soft as a result of the inconclusive rate hike decision in September. Granted it will be a very interesting meeting that day and a rate hike will be a serious call by the FED that the US economy (and global economy) can withstand and accept a US rate hike. Whether that is right or wrong will only be known in the months that follow as the financial markets digest further US rate hikes.

Already December is being pencilled in as another potential date to hike rates, so I think I would be quietly confident that a September rate hike will be followed by a December see how the hike filters through before recommitting to another hike.

The FED have made it clear to us all that their hike path is both US and global data dependent so a growing US economy vs slowing global economy will surely give the FED some food for thought.

For now then the GBP is likely to follow the USD’s path and trade above 1.30. We know that the negotiations on Brexit will only start at the earliest late 2017 so really between now and then it’s business as usual. In fact it would not surprise me if we saw the GBP rally some more especially into the FOMC September meeting.

Wishing you a good and pleasant 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; and at www.parityfx.com

Now Now, let’s not get too excited. Yes CPI has gone up to 0.60% (yesterday) and the GBPUSD rallied on the back of it. Under normal circumstances traders would be doing high 5’s with the BoE that a rate HIKE is coming. Unfortunately is this instance it was probably a low 5 as BREXIT (as predicted and mentioned repeatedly by ParityFX ahead of the referendum) has forced up prices (oil, fuel, clothing) as retailers have had to pass on the higher cost of manufacturing to the consumer. Once again let me say a big thank you to all those who voted leave…you are now poorer. But it will not stop there, this recent 24 hour rally in the GBP has already lost steam and we are teetering with 1.30 again. Basically as you know the BoE have been looking to hike rates (pre 23/06) and were looking for CPI to rise giving them firepower to raise rates. What they never counted on (including me) was 17.4 mio people voting leave.  All the hard work that the Chancellor and BoE have put in since 2008 simply went up in smoke. Already we have seen one UK rate cut and there is further chatter that a further rate cut is needed to stimulate the economy. I would expect the Governor to hold off cutting until such time that the BoE have a better idea on how the UK economy is fairing post Brexit. In other words waiting until at least Q2 and Q3 data is at hand before committing (Novemberi’sh). In-between now and then rest assured the GBP will in all likelihood take another battering in the FX markets.

Tonight the FOMC publish their minutes from their July meeting and it will be very interesting to hear the rhetoric from President Yellen given that many commentators are calling for a rate hike as early as September. While recent NFP would suggest that the US economy is growing nicely the scope to raise US rates is warranted, it is the global economy that must be a serious worry for the FED. You see China is still showing signs of economic weakness, Canada cannot agree with the EU, the UK has voted Brexit, and the EU is like a fish out of water. While in an ideal world the FED can act alone for the benefit of the US economy, that is certainly not the case now and any further rates hikes in the US could hurt the economies they trade with thus slowing the US economy as a result. Of course this is something Yellen and the FED members can ill afford or want considering the events of 2008. So one has to ask, would another 0.25% rate hike really hurt that much? The simple answer is probably no, but then again psychologically it could be very different in that the flow of capital flows more towards the USD and USA rather than say China, the EU or the UK. I hope you get what I am trying to convey. It is a real gamble notwithstanding the “little” event in November when a new US President comes to power. Considering the 2 incumbents you HAVE to think the best option (and only option for that matter) is to vote for Ms. Clinton. But after the 23^rd June fiasco I have realised the people are strange sometimes and vote on the back of lies and deceit. Unfortunately once the dust has settled it’s too late to reverse your “x”. Best Americans think long and hard what kind of America they want on the 9^th November.

All this has led to the USD taking a bit of a bath over the past 24 hours as you can see the highs in the EURUSD and GBPUSD. Oil has managed to climb a USD or so but I’m not getting too excited. What do I think will happen now, well A LOT DEPENDS on the FED minutes tonight as an indication on what they are planning (or not) re US rates. This will then have a knock on effect on the USD, stocks, and money markets. In other words watch the news tonight.

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; and at www.parityfx.com

BREXIT PLAYING GAMES. After a short term rally on Friday that saw the GBP rally past 1.30, the euphoria popped and the GBP fell like a stone over a big figure as BREXIT consequences gripped yet again. I read yesterday that PM May is likely to delay BREXIT until at least 2019 (a year before the general elections) as she feels they simply don’t know where to start the negotiation with the EU on the terms of the exit. This is nothing new given that both Boris and Gove admitted they too don’t have a clue what the shape negotiations will take and how they will be concluded. What we do know and this I think is a certainty is if the UK want the same trade terms they currently enjoy, they will have to allow the free flow of migrants in and out of the UK. That will anger many people that voted leave. You cannot have your cake and eat it. The EU will never allow that as it will be a vote of no confidence within the EU and that is something they can ill afford. Already we have seen negotiations between Canada and the EU almost at breaking point and the EU made it clear to the Swiss recently that if they want to remain in the EU they too have to allow the free movement of migrants (something the secretive Swiss will not like to say the least). So all in all things are not looking good. I have a feeling the negotiations will be fraught with difficulties and negativity until someone throws on the towel and accepts the terms that are on the table. However what those terms are currently simple guesswork.

There has been additional chatter that interest rates might have to drop again to 0.00% to further boost the UK economy. Honestly, I think the opposite should happen and Carney should raise rates. While this could add pressure on an already fragile economy, perhaps it will slow down the demand for cheap money which as we all know led to the financial crisis of 2008.

The point I am trying to make is the BoE should make it tough for banks and corporates so that they tighten their belts and invest their current assets and workforce in improving their sales. The UK electorate’s spending habits have already changed and people are going to be a lot more wary when deciding to invest large chunks of their capital. We are certain of one thing, the UK economy is heading into the roaring 40’s and screaming 50’s (these are strong westerly winds in the South Hemisphere) and we all have to tighten our belts because rest assured things are going to get tough. I am sorry to say but those who voted leave have themselves to blame for any financial hardship that comes their way and they have no right to blame the government OR ask the government for financial help. In fact the government should immediately start withholding benefits and pensions to fill the massive £60-£80bn black hole that will be left void as a result of the exit from the EU (yes I am still angry and saddened by Brexit).

The GBP opens pretty much where we left off on Friday, weak and tipsy. It looks like there is more weakness to come and the market remains short GBP on all fronts. Not that I know anything, but it is my sincere hope that in the coming weeks as importers continue to battle ahead with the high cost of doing business abroad (selling £ to buy foreign ccy), the BoE and government will come out with something that gives the GBP a boost in the short –medium term. While the BoE will not actively intervene to prop up the GBP, there is verbal intervention that I am hoping for. Just a dream, absolutely, but hey let’s hope this dream comes true in some way.

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; and at www.parityfx.com

So it looks more and more likely that the US FED will raise interest rates at their 21 September meeting. Friday saw NFP numbers confirm that the US eco0nomy is indeed flourishing with 255k jobs created. This is exactly what the FED were hoping for and they got their wish.

As a result of the “perky” NFP numbers the USD rallied as did stocks. In fact, Asian equities climbed towards one year highs, while the FTSE climbed to the highs of 2016.  Don’t be confused here with Brexit consequences. While Brexit WILL have an effect on the US economy the anticipated rate hike in the US is a global stocks shot in the arm. Despite Gov. Carney lowering UK rates, the US economy is really what everyone really cares about so a rate hike is a sign of a prosperous economy and that means stocks rally globally.

While things are looking good in the US, the UK’s labour market is not faring well. The UK report on jobs described somewhat of a freefall in the UK job market in July with permanent hiring falling to levels not seen since 2009. It is no wonder then the BoE cut rates and expanded its Asset Purchasing Facility to try boost the economy. It will take some time to see the true effects of Brexit once corporate earnings are published as well as the 3Q GDP that will then include Brexit. While the major banks located in the UK have not started to pull their people out just yet (it’s too soon) I am certain that with time they will see the advantages of locating within an EU member state and this will mean local employees will have to start moving east if they want to keep their jobs. Having said that, wages are higher in the UK than in mainland Europe so these same employees will likely have to take a wage cut if they want to keep their jobs. While I have not heard of this starting to happen just yet, talk has begun and banks will start to make their moves in the coming months.

China stills shows signs of weakness as July’s trade data was weaker than expected with imports falling markedly. Major commodity imports fells in both volume and value terms in July which shows just how fragile the economy remains. Cast your mind back, Pres. Yellen of the FED made it clear that a rate hike is both US data dependent AND global data dependent. So while I note above the strong US NFP data on Friday boosted the chances of a rate hike in September, the FED futures currently stands at a 30% chance of that happening. While the US economy can withstand a rate hike, the FED need to be sure that the hike does not tip the global economy into a recession. There has been lots of talk in the UK of that happening as manufacturing PMI and wage growth already showing signs of clear weakness post Brexit. The way to stop this is call another referendum and see what happens given people now have the full picture and aware of the lies the LEAVE camp used to convince people how to vote. I certainly hope PM May does just that and calls for another referendum early next year.

In the meantime I am afraid to say the GBP continues to teeter on the edge trading on the low 1.30’s vs the USD and breaking 1.1765 (0.8500) vs the EUR. In layman’s terms things are looking pretty grim. I just cannot see how things are going to improve especially with talk the BoE might have to cut UK rates again to 0.00. Prepare for negative interest rates.

Have a good day

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; and at www.parityfx.com

Another week another round of rumours.

This week sees the publication of the US NFP (labour/employment) numbers. Most commentators are pointing to a US rate hike in September (economic data dependent). While China is still showing signs of weakness (PMI numbers disappointed again) the FED has indicated they are more concerned about US data rather than global data…really? That’s a change of heart!! I have said that the US must only raise rates if they think the US data is sustainable and continuous (and global economic conditions) rather than one good months followed by a disappointing month followed by a good one etc etc. Additionally with US elections looming and both candidates being rubbished in the news the FED must tread carefully. I am still in the dark as to Trump’s foreign and domestic policy and Clinton has her issues too regarding the email saga (which can only be described as clutching at straws).

I wonder with Brexit now a month in, it will be interesting to see how the data starts to come out. The UK’s GDP numbers were pre Brexit so now we have to wait and see what the numbers look like for July and how the negativity surrounding Brexit is hitting manufactures and retailers alike and consumers spending their cash.

FX rates continue to trade sideways for the most part. GBPUSD ranging 1.30-1.33 while EURGBP 0.8350-0.8450 and EURUSD 1.0950-1.1250. Until we get a definitive confirmation on Friday that US labour market is indeed growing and sustainable one cannot help but think currencies will trade within the range. Stocks are thinking the number will be good given the recent rally, then again things can change at the drop of a hat. We saw this only too clearly in June. So let’s all be a little careful not to get too excited just yet.

As an interesting note, I am currently in Spain on vacation. Speaking to local agents, they have told me (and I have seen) the Spanish economy is well on the road to recovery and King Felipe VI has nominated Mariano Rajoy of the PP to form a government. This is seen as pretty positive. Property prices in Spain (Costa Del Sol) are up over 20% over the past year and with the drop in the GBP UK citizens looking to purchase in Spain are being hit hard. Nevertheless agents are telling me this has not stopped UK buyers entering the Spanish market with a view to moving to Spain. With holiday hotspots the victims of terror attacks families are coming to Spain in their hundreds of thousands further boosting the economy. In fact our favourite Pizzeria in Elviria is now heaving from 7.30pm…which I have never seen before. No doubt the recent terror attacks in the mid east, France and Turkey have had a severe effect on the local economies.

Have a good day   

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; and at www.parityfx.com