High Low High Low
EUR/USD 1.1397 1.1304 USD/ZAR 11.5014 11.4245
GBP/USD 1.5215 1.5166 GBP/ZAR 17.47 17.36
EUR/GBP 0.7491 0.7449 USD/RUB 69.25 67.52
USD/JPY 117.45 117.02 USD/NGN 192.5 186.3
GBP/CHF 1.4086 1.4009 S&P 500 2042 2026
USD/ILS 3.9218 3.8904 Oil (Brent) 55.16 53.04

We have the Bank of England rate decision later on today and no one should expect any change from the current 0.50% base rate. Not after the two hawks retreated last time around and opted to vote for no change. Realistically this is not going to be a big event in the scheme of things, only a surprise would do that, and as I said that would be a very unlikely outcome.


Yesterday the People’s Bank of China (PBC), the central bank of China, loosened monetary policy by cutting the required reserve ratio in an effort to counter the impact of capital outflows and to encourage banks to increase lending to the domestic economy. This was a positive for Asian equity markets. This is yet another major central bank easing policy at the start of 2015. So far, I believe we’ve seen Switzerland, Eurozone, Denmark, Australia, Canada and Russia easing. I’m sure I’ve missed a few, but you get the point. As I’ve said before, if the Federal Reserve does raise rates later on in the year, it will be for symbolic reasons only. US dollar strength will actually do the heavy lifting in terms of tightening domestic monetary conditions in the United States anyway.


Meanwhile, in Europe, the ECB has stepped up the pressure on the new Greek government by tightening the access Greek banks have to cheap liquidity. This is a clear signal to the new government that attempts by Athens to secure funding in the period between the exit of the bailout programme and any new agreement will not be easy. One would hope that we don’t see the brinkmanship that has preceded Eurozone crisis resolution in the past, but the evidence is mounting that this is exactly what we’re going to get again.


Markets are currently in complex corrective mode at the moment, with no clear signs of trend. We still maintain that when this phenomenon concludes, the trends which were previously in force will come to the fore again. So we still continue to anticipate further dollar strength and euro weakness. Please note that we have non-farm payrolls in the United States tomorrow. The forecast is for an increase of 234,000 jobs.


Meanwhile the damage from the collapse in energy prices has unsurprisingly caused default risk in the US oil & gas sector to perk up. What is transparent for company’s finances applies to exposed countries as well. You have been warned…
















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One thought on “20150205 – COMPLEX CORRECTIVES”

  1. Greaat post bbut I was wanting to know if you could write a litte more
    on this subject? I’d bbe very thankful if you could elaborate a little bit more.

    Many thanks!

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