Oil prices rose around 1 percent on Thursday, extending gains from the previous session after a surprise third consecutive weekly U.S. crude inventory draw tightened the market.

South Africa’s rand firmed to its highest in four weeks against the dollar on Wednesday, helped by strong appetite for high yielding emerging market assets as investors anticipate low U.S. interest rates low for longer this year. South Africa’s headline consumer inflation dipped below the top end of the central bank’s target in August to its lowest in nine months, data showed on Wednesday, suggesting interest rates would remain unchanged at today’s monetary policy meeting.

Nigeria; Interest rate cuts alone will not help to pull Nigeria out of a recession amidst rising inflation, the country’s central bank said on Wednesday.

I TOLD YOU SO!!! Yes I was right. The FED held FED rates steady at 0.50% at their meeting last night. Just like I have been saying for a couple of weeks (while a number of VERY well-known financial institutions were calling for a 0.25% hike). Simple, stick with ParityFX J

While agreeing that the case for a rate rise had strengthened, Yellen argued that it made sense to put off a move for now amid signs that disillusioned Americans who dropped out of the labour market are returning and looking for work. “The economy has a little more room to run than might have been previously thought. That’s good news.” Additionally the FED was accused by presidential nominee Donald Trump that Yellen is deliberately keeping rates low to help make President Barack Obama look good in his final year in office. When asked about such accusations, Yellen repeatedly disputed that political considerations played any role in Fed decisions. “We do not discuss politics at our meetings and we do not take politics into account in our decisions,” she said. I can tell you one thing for certain, whatever Mr Trump says simply divide by infinity and then multiply by 0. Hot air and some TV air time. The FED is 100% independent and makes their decisions based on the state of the US economy and not to satisfy a political party.

Ms Yellen also made clear that the FED still intends to raise rates this year. “I would expect to see that, if we continue on the current course of labour market improvement and there are no major new risks that develop,” she said. Now this is where it gets interesting…the FED also scaled back the number of hikes it expects next year, from 3 to 2. Regarding this year then there are 2 remaining meetings, November and December. I think given the former is right by the US elections they would prefer to hold back and do nothing. So that leaves December where I THINK if things continue as they are and the economy regularises (and inflation picks up towards 2%) the FED will surprise the market and hike 0.50% – that will kill 2 birds with one stone and their job will be done for 2016 – 1% hallelujah.

Now some BREXIT news and I quote directly from an article by Bloomberg which says it all, “Global investment banks are throwing in the towel in the battle to keep London the home for clearing of $570 billion of euro derivatives. Executives tell Bloomberg’s they expect France or Germany to prevail in the tussle once Brexit is underway and are making plans to cope. While it might take years for the transitions to happen, jobs and operations central to the clearing function will be among the first moved to the continent once the U.K. triggers its withdrawal from the European Union, one person said. It would mark a defeat for Chancellor of the Exchequer Philip Hammond, who pledged this month to seek to protect London’s status as the epicentre for European trading in interest-rate swaps, accounting for about 39 percent of the global market. European Commission Vice President Valdis Dombrovskis, the bloc’s financial-services chief, today reiterated that the U.K. faces a choice between imposing immigration controls and letting its financial firms continue to trade freely with the EU.” I have said this all along. The economic numbers you are seeing today have absolutely NO REFLECTION of what’s going to be like once we invoke the Article. That’s when the proverbial cat’s hairs hits the fan. I am just waiting for the day that happens and the EU tell the UK to take a hike. PM May as much as I admire her and her comments that the EU will HAVE to agree to terms of trade with the UK….I think she is dreaming. Prepare for a terrible and tough generation. You have been warned. Pity you voted Leave!!

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FED member Lael Brainard did not disappoint the Doves by stating in a nut shell the case to raise US interest rates is “less compelling” arguing that US inflation was not where near the FEDS target of 2%. This helped stocks reverse their earlier morning’s falls. European stocks opened up 0.50% higher this morning as a result with the USD trading softer across the board.

Federal Reserve Governor Lael Brainard argued for a cautious approach to raising rates, abating worries about higher rates sparked by another Fed official last week. As I wrote yesterday some investors were worried that Brainard could change her stance and move towards a hawkish stance thus adding conviction that a US rate hike was on the cards. As things stand then there has been no real change and now as the blackout begins (no FED news) we simply have to wait until the 21^st to see if they will or won’t hike rates. As I have said time and again my view is the FED should wait until at least December allowing the dust to settle post US elections and more importantly allow another 3 months for data to confirm the “true” state of the US economy (in the face of Brexit and China). I have further stated that I think if data does continue to shine at the current rate, there is a strong case for the FED to hike by 0.50% (rather than 0.25%) and thus fulfil their desire to raise rates to 1% by close of 2016.

What could help the FED’s case for hiking 0.50% in December is an improvement in China’s economy. After a sluggish July, China’s Industrial Production rose to 6.30% from 6.00% (YoY). In other words if this improvement continues for the next few months coupled with small rises in US inflation there will be a very strong case for the FED to hike (surprisingly to many) by 0.50%. What a strong message this will give the market and in so doing send investors clamouring for USD (assets) and setting the tone for the USD (FX) for 2017. We all expect the USD to hit PARITY and a hike of this nature could be the tonic that sets the currency moving in this direction. Oil seems to be finding strong support in the $47.50p.b area and should prices continue to tick higher this will help the US achieve their inflation target. So I guess you can see where I am going with all of this. Hike 0.50% in December on the back of improvements in US NFP, higher oil prices and solid China data.

As far as the GBP is concerned, we saw a late rally yesterday as the currency floated through 1.33 handle. We continue to trade around these levels this morning with GBPEUR trading around 1.1860 and looking less pressured on the upside. Regarding Brexit, the Government has basically announced they will not be keeping a running commentary on how negotiations are going. Of course there will be leaks but I doubt there will be officials updating us on the progress. The reason is the information could have serious consequences for financial market volatility so staying away from the press is the safest option. PM May stated “The new relationship will include control of movement of people from the EU to the UK, and it will include the right deal for trade in goods and services, it would not be right for me or this government to give a running commentary on negotiations”. What we have heard over the weekend though is British citizens may have to apply for a visa (and pay of course) to visit the continent (EU states). Unreal!!! We have just gone back 50 years. So much for progress and putting a man on the moon. Furthermore (as I mentioned yesterday) Leave camp dropped one of their KEY pre referendum pledges £350mio extra a week spent on the NHS (money diverted from the EU to the NHS). MPs have now demanded the group admit the lie (I said this yesterday) and apologise (waste of time) or justify the transfer and when it will happen (never!!). Lies – lies and more lies that what the Leave group campaigned and unfortunately 17.4mio people lapped it up. I am lost for words.

A number of high profile EU members have already announced the UK will not find it easy at the negotiation table. Emmanuel Marcon (French Economy Minister) said the City’s “Passporting rights” would not be preserved unless the UK contributes to the EU budget and no concessions on freedom of movement while Danish PM Rasmussen told Bloomberg he was urging his colleagues not to give Britain a good deal. Honestly, be prepared for outright gun slinging and an almighty punch up (not literally). The UK is about to be taught a very tough lesson on the consequences of jumping ship and not allowing women and children to occupy the first life boats. Prepare to start swimming in open water ladies and gents…the sharks are circling!!!!

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With the impending FED meeting “around the corner” global stock markets have been hit hard today with stock markets down between 1.00-1.50% depending where you invest. FTSE down 1.3%, DOW 0.75% Italy 2% as investors fear the FED will ignore recent poor data and hike rates. The only saving grace is later today FED member Lael Brainard who is an avid wait voter is giving a speech with investors waiting to see if she gives any clues as to how the FED will vote on the 21^st September. MS Brainard is a “Dove” so if she changes her rhetoric in any way and leans to a Hawk, then its game on and in all probability the FED will go ahead and hike. I am a Dove myself and think the FED should wait regardless and wait for further confirmation on how the US economy is fairing (including Inflation and NFP). If the FED chair wants to increase the market probability of a rate hike then having a Dove speak like a Hawk is the best opportunity to confirm a rate a hike is on the cards. From tomorrow the FED goes into information lock down (Blackout) so all eyes will be on the speech later today. FYG the speech is scheduled for 1.15 EST.

Despite the great UK PMI numbers the GBP was hit hard late last week on disappointing data (and US rate hike risk) sending the GBP to the cleaners. In addition this morning the British Chamber of Commerce (BCC) announced they have slashed the UK’s GDP growth for next year to 1% from 2.30% citing post Brexit fears and uncertainty (and rightfully so). How many times have I commented on this issue that when the time comes and we start to negotiate the terms of Brexit the EU will go for the knock-out blow and play hard ball. Already business investors have slashed spending and hiring sparked by the uncertainty that surrounds Brexit. What really annoys me is the Leave camp have now removed the promise of £350mio to the NHS (from the EU) from their manifesto (something that as you know was a key LIE on their bus). The fact that they lied to such an extent should in itself be reason to call another referendum. I cannot believe 17.4mio people fell for the lies. The Remain camp on the other hand told the truth throughout and already the damages are being felt. Importers have been hit hard, holiday makers are cancelling foreign holidays and hiring has come to a stop. And we have not even started negotiating the terms of our exit. PM May has told her cabinet to accept Brexit and get on with things. But can they really forge ahead in the face of untenable hardships around the corner. Why can’t she ask for another referendum now the cards are on the table? I am almost certain things would be very different this time round. While immigration is an issue even once the terms are agreed I am certain the EU will say to us if we want preferable terms of trade they must be accompanied by freedom of movement for the labour force. How can the UK expect to enjoy trading without the free flow of people? Just won’t happen!

This is what petrifies me going forward and why I think the GBP will get an almighty hammering once negotiations start. This will send the UK economy into a freefall and set us back 6 years. What a shame really after all the heroic work ex-Chancellor Osborne and ex-PM Cameron achieved. Don’t forget at one stage we were the fastest growing economy amongst Western Countries. Now we find ourselves categorised with the Greeks. Even Spain will grow faster than the UK.

So all eyes and ears will be pealed to the TV and radio at 6.15pm local time when Brainard speaks. One thing is for certain when I write this blog tomorrow morning I’ll either be in a good mood or bad mood. Either the GBP will be smoking above 1.34 or withering just above 1.31 (depending how the EUR gets dealt). It is too much of a tough call so I guess investors should simply wait in the sidelines and act once the news is out.

Good luck and let’s be careful out there today

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Oil prices pulled back on profit-taking on Friday after settling more than 4 percent higher a day earlier, following a surprisingly huge drawdown in U.S. crude stocks as Gulf Coast imports slumped to a record low.

South Africa’s rand gave up earlier gains against the dollar on Thursday, with traders expecting it to trade sideways for some time as nervous investors kept an eye out on possible moves against Finance Minister Pravin Gordhan. Growth in South Africa’s two key sectors slowed on Thursday, with weak activity renewing fears South Africa may struggle to avoid recession and a downgrade of its debt to junk status by year’s end. South African Finance Minister Pravin Gordhan, who is facing an investigation by police that the opposition has called a “witch-hunt”, said on Thursday that whether he remained in office was up to President Jacob Zuma.

Nigeria’s Independent National Electoral Commission (INEC) has postponed elections in the southern state of Edo to Sept. 28 from Sept. 10 because of security threats, a government official said on Thursday.

What can I say. 2 incredible PMI numbers in the UK followed by a slightly disappointing Services number and the GBP gets knocked for 6. Down 150 points at one stage it just goes to show how volatile the GBP is not only to the upcoming Brexit negotiations but also to UK data. One could argue that the data will give the BoE reason to cut UK interest rates again to stimulate the economy. I do not agree. I think rates should stay at 0.25% and allow the economy and the currency to regularise itself. Already savers have been hit hard (not to mention mortgages) banks have cut saving rates and not passed on the rate cut to mortgage holders (excl tracker mortgages that follow the UK bank rates). I think (perhaps I am “talking my book”) once the panic selling has been extinguished we could see the GBP start to find some support and rally again. I just do not see any reason why the GBP was hit so hard. What could help is a Dovish member of the FED is giving a speech on Monday ( Lael Brainard) who has openly called for a delay in hiking rates. If she changes her stance then that could be a game changer and lead to a hike later this month. If she sticks to her guns then that will help those that are calling for a rate delay

Have a great weekend

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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.

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Oil prices erased early losses to trade higher on Wednesday, but gains were limited as market participants remained skeptical producers would reach an agreement to freeze output to rein in a global supply glut.

The ZAR rose as much as 2.5 percent against the dollar to its strongest in more than a week on Tuesday, buoyed by data that showed South Africa’s economy bounced back between April and June after a rocky first quarter. South Africa’s economy grew its most in six quarters between April and June as declines in the rand helped drive strong growth in mining and manufacturing, offering some breathing space to a government riven by internal tensions.

A long-awaited bill reforming Nigeria’s petroleum industry is effectively on hold until tensions ease in the restive Niger Delta region, the country’s oil hub, an influential senator said on Tuesday. Nigeria’s trade deficit narrowed in the second quarter boosted by a currency float in June lifting exports, the national bureau of statistics said on Tuesday, but the rise was not enough to help the economy avoid a recession.

Super Tuesday as the USD got somewhat of a hammering yesterday and continuing into this morning European open climbing above 1.34 (GBPUSD) and 1.12 (EURUSD). GBPEUR unfortunately has not enjoyed the same success and currently trading just above 1.19. I keep saying it, I think the FED will delay hiking rates later this month as data continues to “disappoint”. I do not feel there is any rush to hike rates and it would be in their interests to delay to December and hike 0.50% if data allows. Additionally we will know who is in the White House, Mr or Madam President. I know who I have my money on…the first Madam President to hold the highest office. It will be like coming back home!!

The USD was driven mainly by ISM non-manufacturing index which fell to 51.40 (vs expected 54.50). While the number is not something the FED will be shaking at, it still shows that the US economy is fragile and needs to be dealt with accordingly. There are a number of banks who still think the FED will raise rates in September..while I see their point I am basing my opinion on consistent data which in the words of the FED is dependent. You cannot have 1 month’s good 1 month average 1month bad and think that’s ok to give rise to a rate hike. There has to be consistency and right now I just don’t see it. If the FED do raise rates this month then they are thinking the data is acceptable regardless of being good bad or ugly. But is that sending the market the right message? After all they have said over and over again hiking rates is data dependent. Not to mention the issues facing China, the EU and the UK (Brexit). In other words the coming months and years will be fraught with difficulties and insecurities, so hiking rates now only to have to cut them later on will signal the FED had no evaluated the issues enough…

So as far as I am concerned its business as usual and the EUR and GBP (and other major currency pairs) should enjoy some respite until D-day and the will they won’t they hike day

Regards

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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.

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Crude prices extended gains on Tuesday, buoyed after top producers Russia and Saudi Arabia agreed to cooperate on stabilising the oil market, but a lack of immediate action to rein in output capped gains.

South Africa’s rand firmed against the dollar for a third straight session on Monday as U.S. interest rate fears receded and, although risks around domestic politics capped gains, it traded nearly 3 percent above last week’s one-month low. Members of South Africa’s ANC chanted slogans outside its headquarters on Monday demanding President Jacob Zuma step down in a rare public show of anger in the ruling party after its worst election performance since the end of apartheid in 1994. South Africa’s biggest platinum mine-workers’ union and the industry have failed to reach a deal on workers’ pay, the union said on Monday, raising the prospect of industrial action in the world’s top producer of the white metal.

Nigeria’s national oil company said on Monday there were no immediate plans to increase gasoline prices, days after fuel marketers and former NNPC management called for the removal of a cap on price levels.

The Kenyan shilling held steady against the dollar on Monday as demand from retail importers and manufacturers was seen being met by inflows from charities and the tourism sector.

Pretty quiet sideways trading yesterday as the market caught its breath for Labour Day. Following last Friday’s “disappointing” NFP number, traders have started to weigh up whether the FED will indeed raise US rates on 21^st Sept or wait until December (and raise by 0.50% as I am predicting). There has been no let up on Chinese growth, and the US made it very clear over the weekend that their priority is the EU bloc with the UK bringing up the rear. In other words all is not as well as the FED would have hoped. While the US continues to trade in or around 2.0-2.5% GDP the US labour market shows signs of fractures. There is no consistency to the growth rates and month by month the numbers fluctuate wildly. That says to me that there are still risks and corporates are not hiring as aggressively as the FED would have liked. While inflation is creeping up, the rise has more to do with external factors outside the US’s control. I continue to stick to my guns on this one and think the FED will delay hiking in 2 weeks and rather wait till December once the US elections are out the way and hit the market with a double shot raising rates 0.50%. That in itself will set the tone for the USD into 2017 and should give the US economy the boost by attracting investors looking for increased yield.

The GBP received yet another boost yesterday as Services PMI came in at 52.90 from 47.40 (yet another 5 point increase). The rise was the largest in over 10 years and again signaled the UK’s resilience to Brexit. Seems my calls last week for the GBP to rise towards 1.36-1.38 are now gathering momentum (short term). Again I must reiterate, the rise in the GBP must not be taken as a mark of things to come in the medium to long term as negotiations on Brexit have yet to begin. There has been an enormous amount of rhetoric over the past 72 hours regarding the UK’s standing amongst the US, EU, China and Australia. I can tell you one thing, the US and EU will not be handing out party bags to the UK when negotiations start. We will be lucky to get away with a piece of cake. Why on earth would the US, China and EU agree to the same terms of trade but restrict the free flow of workers. The points system as in Australia and as recommended by Johnson and Gove will simply not work. We are vastly different countries and our geographic location makes us attractive to the US and East in terms of access to East and west. No wonder every man women and child wants to come to the UK. Then there is that small issue of the UK being an island (like Manhattan) so there is only so much we can absorb before things get messy.

As for the coming week I still think the GBP will appreciate against both the USD and EUR as the UK data impresses and investors start to claw back short GBP positions.

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It was bound to happen. 2 big stories over the past 72 hours: (1) US NFP on Friday disappointed printing +151k vs +180k expected and +255k July and (2) the US, China and Japan have all made credible “threats” about the UK’s position (vis a vis trading) following the Brexit vote.

• So all is NOT as it appears. Seems my comments last week have now come to fruition and the FED will have some serious debating ahead of their meeting on 21^st NFP came in at a mere +151k leaving the FED scratching their heads and thinking if US rate hikes are indeed “data dependent” then on that data alone they will have to delay hiking rates. I have said this many times, I truly believe the FED MUST delay hiking at the forthcoming meeting and allow more time for the US economy to regularize and normalise (not to mention the US elections) before hiking. It is for this reason I believe the FED must and should delay hiking rates until the 14^th December at which point the FED will have another 3 data points to reflect and act upon, and also know who the new commander and chief is come January 2017. If the economy does indeed show signs of stabilisation over the coming months I will be looking for a 0.50% hike rather than 0.25% which most people think. By hiking 0.50% they are able to hike to their desired 1% by year end and in so doing provide a boost to global stocks (good for pensions and investors) and give the USD the platform to rally towards PARITY vs the EUR going into 2017.

• Finally some negative consequences to Brexit. President Obama kicked things off by saying the UK would not be the priority for a USD trade deal (i.e., please join the back of the queue) which was then followed by Japan who issues an unprecedented 15 page warning about the consequences of Brexit. The icing on the cake came from China and tensions boiled over regarding their involvement in UK nuclear power.

Let’s start with the USA. Well let’s be honest the US would rather deal with 500 mio (EU) than with 65mio (UK) people. That would simply mean the UK will have to wait until the US has concluded their agreements with the former bloc before considering throwing the scraps to the UK. Business is business and I am afraid those 17.4mio people that voted leave should have considered their future more wisely.

Even before the dust had settled Japan threw their curveball stating that a full exit from the EU will probably lead to corporate exits form the UK unless the current financial privileges are maintained in full. Half of Japans investments in the EU comes to the UK with the likes of Nissan, Honda, Mitsubishi, Nomura, Daiwa and MUFG employing tens of thousands of people. If these corporations made good on their threat and left to the EU the void would be catastrophic for the UK economy. I wonder how many of those employees voted to leave. Some sleepless nights ahead I am sure. The Japanese report conclude “Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to continental Europe if EU laws cease to be applicable in the UK after its withdrawal. In light of the fact that a number of Japanese businesses, invited by the government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”

And finally China…PM May is said to have angered the hosts (and the French) by placing the Hinkley point nuclear project under review. The reason, security concerns over Beijing’s involvement. It would appear that the PM is looking to speak to other world leaders and see what they have to offer before committing to the Chinese/French deal. The PM was hoping the Chinese would take a passive investment rather than a full partner active one.

Now you probably think I am a little over the top here but something strange happened during the referendum. For weeks leading the 23^rd, there was one person who was visibly absent from the podium. Yes you guessed it, MS May.  She was nowhere to be seen and not a peep to add. Which got me thinking. Is the PM a LEAVE voter!! I would think YES. Given ex PM Cameron already had Ian Duncan Smith, Boris and Gove to content with (not to mention a Labour party that didn’t care) I honestly think Mr Cameron made some agreement with Ms May to “disappear” during the run in to the referendum in return for the TOP JOB once he quit in 2020 (assuming remain won). It is for this reason that I think my conspiracy theory was right given that the turnaround between Cameron leaving and May coming in was well lightning fast. Something very fishy is going on.

As for the GBP this week, I said this last week. Despite the doom and gloom above I continue to think the GBP could drive higher to 1.36-1.38 at least. Sentiment continues to shine given we have not started Brexiting just yet.

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Crude prices rose on Friday after losses of more than 3 percent a day earlier, with investors treading cautiously ahead of key U.S. employment data that will help gauge the health of the world’s largest economy and oil consumer.

South Africa’s rand recouped some of its previous session’s losses on Thursday, while stocks closed slightly lower led by a weaker financial.

Nigeria raised 212.85 billion naira ($654.92 million) in an auction of treasury bills on Wednesday, with yields little changed from previous sales, data from the Debt Management Office showed on Thursday. Meanwhile the NGN has hit yet another year low at 424 as the CBN continues to make it very expensive for importers and companies/individuals looking to buy foreign currency. No end in sight to this recent devaluation.

Let me start by saying I did not have prior knowledge of the UK manufacturing PMI that was published yesterday. You saw in my comments yesterday I said I thought the GBP would trade through 1.3200 (at the time GBPUSD 1.3130) and trade through it did. When the PMI was published the GBP rose 0.98% to trade at 1.3260. Then towards the European close the GBP actually broke 1.33 at one point before profit taking brought us back to 1.3270 where the market is currently trading. Now let’s not get ahead of ourselves. Yes August was a super month and not since March 2009 has the PMI jumped by 5 points month/month. Brexit was done and businesses knew they simply had to get used to the fact. However and this is a big HOWEVER Brexit has not started. It is like commissioning to build a super yacht but you have not seen the prints on what it looks like. It could be the Pelorus or a Dinghy.

In other words we have not started negotiating our exit so how on earth do we know what the terms or financial fall-out will be. So yes as things stand its business as usual but that I can assure will change massively once the interested parties sit down and negotiate the terms of our exit. Therefore it is only then that we will know just how bad (or good) Brexit is going to be for the UK economy. I can assure you one thing, it will not be easy sailing and I have a feeling the EU are going to play hardball. Why would they give us the same advantages being a member as those as a non-member. Just ask the Canadians. It will get very very ugly.

For now and at least till 1.30pm when the US publishes NFP the GBP will trade sideways awaiting the number that could quite possibly set the tone for the USD for the next few months. Expecting +180k a number well above +200K will set the USD on fire as traders and economists will be thinking that was the last piece of the puzzle that the FED were looking for to raise rates on the 21^st Sept.  I still think they should hold back until after the US elections and rather (if the numbers match up) hike 0.50% on 14^th Dec. That would be the best of both worlds.

Have a great weekend

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Not much movement on currencies as we await NFP numbers tomorrow. Basically what I wrote yesterday continues to dominate the FX markets with traders and investors happy to “take a breather” ahead of tomorrow’s announcement.

The GBP weakened at one point below 1.31 handle but managed to find the bottom and rally back through 1.3100 towards the close in NY last night and continued the rally into the European open.  Investors and traders need clarity tomorrow before embarking on the next USD move following Pres. Yellens comments at Jackson Hole last Friday. What is “expected” (within reason) is a strong reading tomorrow will boost the USD’s chances for the coming months as financiers look to the FED to raise US rates (September and December). However having said that, I am not alone when I say I think the FED should delay hiking in September and give the US and global economies more time to regularise and stabilise. Merrill Lynch/BOA, DB, and a number of other well-known institutions have all commented recently that it is still too early to raise rates in September. What worries me and I am sure many other investors is if Mr Trump wins in November. You see as things stand we simply do not know what his economic and foreign policies are and this will create a degree of uncertainty which leads to investors potentially dumping US stocks and the USD. Mr Trump has built his business on debt. Borrow build and spend. Will he run the US economy the same way? Even his comments recently on the US’s ability to use nuclear weapons worries me. Of course saying and doing are 2 very different things but do you really want to second guess what he will do.

As far as Ms Clinton is concerned, the whole email fiasco is hot air. So what if she used her private email to communicate with people. It is not like she gave away state secrets. Mr Trump and his advisors are trying everything they can to show Ms Clinton as an untrustworthy and dangerous leader. I totally disagree, I think Ms Clinton would be an outstanding President. She has been in DC/NY for most of her working life and knows how the US “ticks”. She is likeable and more importantly the US needs some fresh blood. She has a clear foreign, domestic and economic policy which will boost US assets and more importantly the US economy. For this reason I think if Ms Clinton wins investors will pile into US assets and the USD and this will make the decision by the FED to raise rates in December a formality. In fact why not increase rates by 0.50% (in December) and that way the FED gets to kill 2 birds with one stone (delaying hiking in September vs hiking double in December). That is what I think SHOULD happen and I hope I am right.

As far as the GBP is concerned (and the EUR) vs USD (and crosses) – as per above I think traders alike will be sitting on the hands and trading sideways as they await tomorrows NFP numbers. If anything I think the GBP will trade better today and potentially test 1.32 handle. This will see GBPEUR hopefully climb towards 1.1900. I think if the FED do delay hiking in 3 weeks the GBP will bolt higher as a consequence. In fact I wonder if traders are positioning for just this regardless of tomorrow’s number. Time will tell and tomorrow at 1.30pm we will finally know where we stand.

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.

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