High Low High Low
EUR/USD 1.1374 1.1348 USD/ZAR 11.4749 11.3944
GBP/USD 1.5553 1.5519 GBP/ZAR 17.85 17.69
EUR/GBP 0.7325 0.7304 USD/RUB 61.91 60.21
USD/JPY 119.10 118.67 USD/NGN 202.5 201.0
GBP/CHF 1.4770 1.4716 S&P 500 2,117 2,111
USD/ILS 3.9577 3.9320 Oil (Brent) 62.21 61.08


RBS, one of the UK’s large ‘high street’ banks looks set to sell its investment banking assets. If more large banks around the world did this the world would probably be a much better place. As wonderful a time as the Clinton era was, repealing the Glass-Steagall act in 1999 will probably be viewed as a huge mistake by economic historians at some point in the distant future. There is simply no way, in my view, that retail banks should be allowed to conduct riskier business with our deposits subsidising their activities. One imagines there’ll be a scramble for some of these valuable investment banking assets, this could give the pound sterling a small boost at some undetermined point in the future, assuming a foreign entity is the bidder.


This morning, a Spanish GDP year on year comparison for Q4 2014 showed a 2% rise, which was in line with forecasts and matched the growth rate of the previous quarter. In a speech yesterday, the Spanish Prime Minister forecast growth of 2.4% in 2015, and with unemployment falling, albeit from over 20%, things are clearly improving. I do think PM Rajoy is taking it a bit far suggesting that the Spanish turnaround is the envy of the EU! I mean.. seriously!?? But his northern neighbours would certainly not begrudge him such hubris, Merkel and Schauble must surely be pleased and may point to Spain in discussions with the new Greek government.


I note with interest that Cote d’Ivoire has successfully issued a $1bn bond, with the market accepting a lower yield compared equivalent securities sold by Nigeria, Zambia and Kenya. Political stability and being the top cocoa producer in the world has gone a long way to ushering a period of normality for the West African country, but what I find most interesting is that the market is willing to differentiate and assess sub-Saharan economies on their own merits. This is a good thing, and illustrates that risk appetite – despite periods of taper tantrum and commodity related disruptions – remains robust. And rightly so… major equity markets are at record highs, indeed I believe the MSCI World index has recently achieved such, while currency markets have been largely calm so far in 2015. As I’ve mentioned before, I believe that EUR/USD continues to trade within a corrective complex, but as I’ve also pointed out, when this period of consolidation ends I expect the bigger picture bullish dollar trend to re-assert itself. At this moment in time, it is unclear what the narrative will be which drives the trend continuation.. it could be dollar strength, or it could be euro weakness. Two different paradigms that largely amount to the same thing, at least where EUR/USD is concerned, but depending on which narrative is in the ascendency will be the fate of a multitude of other assets.


For now oil continues to recover, but I still maintain that there are limits to how far this can go. OPEC continues to maintain supply at pre-crisis levels, and producers in the United States are still very much in the game. This is something to watch over the next few months, the ripple effect from last year’s energy price collapse will start to lose its power in the coming months, so we would all be best advised to keep an eye on the employment data in both the US and UK. The data has continued to be solid, and wage growth looks to be picking up. It is not clear to me that the market is properly pricing in the risks of a more aggressive reaction by the Federal Reserve. Or perhaps the markets are smarter than all of us and it looks even further out at the turmoil a few rate rises might inflict on global asset prices! Never-the-less, we must remain vigilant.












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