Good morning

	High	Low			High	Low
EUR/USD	1.0876	1.0806		USD/ZAR	11.8971	11.7290
GBP/USD	1.4904	1.4807		GBP/ZAR	17.63	17.51
EUR/GBP	0.7300	0.7322		USD/RUB	55.32	52.10
USD/JPY	0.73	0.73		USD/NGN	199.3	199.0
GBP/CHF	1.4339	1.4287		S&P 500	2,078	2,071
USD/ILS	3.9546	3.9253		Oil (Brent)	59.23	58.16

FX markets appear to have taken a breather over the past 36 hours given light fundamental events and breaking news. In fact what is setting the market alight is the stock market that continues to shine. Even the doomsday scripters have disappeared for now. I guess with interest rates at all time lows and the difficulties in getting onto the property ladder, the next best thing to earning a return that beats your interest rate are stocks. Returns > Risk!!

Getting back to FX, Greece will continue to weigh on the EUR given their ongoing financial difficulties and inability to find a solution both at home and with Troika. With the VERY disappointing NFP numbers people are now speculating that US rates will now rise in or around September. Truth is, its guess work.  And the FED has said many times they can raise rates outside the FOMC meetings. No doubt the strength of the USD has been one reason they have not indicated the rise was imminent and even at the last FOMC meeting all the negative talk on the strength of the USD has faded and we find ourselves at a pivotal point.  I personally will find it difficult to see a “mini-collapse” in the USD. I mean look at Friday (granted liquidity was thinner for Easter holidays), a terrible NFP number (half the number that was expected) the USD falls to 1.10 (EURUSD) and a mere 2 days later we pretty much back at where we started. That tells me the market continues to buy the USD at every opportunity and any pull back is a chance to merely add to the position.

Later today sees the FOMC minutes being published. This will make for interesting reading as it provides further insight into the factors that prompted the FOMC committee to end the use of “forward guidance” as well as revise their economic projections. No doubt excluding last Friday’s NFP number the committee must have been satisfied that the solid growth in labour was sufficient to remove patient and end the forward guidance. No doubt friday’s number sent them back to the drawing board!! The strength of the USD no doubt also had a hand in the change in the rhetoric. My predictions remain the same and I continue to look for PARITY IN EURUSD in the coming months.

GBPUSD….I have read newspaper stories recently on whether one should buy “holiday money” now or after the election. Unless there is an outright win for the Conservatives (pro business), I really do believe that the GBP could be heading for a hiding both against the USD and EUR. In fact a Labour/SNP government could send the GBP to 1.4000 as investors pull the plug. If i was in their shoes I would consider hedging at least 50% NOW with perhaps 25% just before the election and the rest after. I do not think any one party will win a majority so it will be very interesting indeed to see who will be the strongest party that leads a coalition. To add fuel to the fire, Labour is now promising to scrap the non-dom tax status of British citizens who do not pay tax on earnings made outside the UK. As the Telegraph newspaper reported this morning, “The pledge came after business leaders from 30 of the country’s biggest companies ADDED their names to a letter warning about the consequences of a Labour government”. The paper added The Labour leader’s latest pledge to increase the tax burden on Britain’s wealthiest came as more chief executives sought to publicly endorse the Chancellor’s decision to cut corporation tax, warning that a “change in course” would “put the recovery at risk”. With the latest additions that means over 150 company bosses (including 10 from the FTSE 100 firms) have signed the letter. These companies employ in excess of 100,000 people not to mention their dependents. My gut tells me the GBP is staring down the barrel of a shotgun!!

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