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HiFX Market Update 23rd October 2013

Please find below the market commentary from the HiFX Affiliate Team. If you have any questions please do not hesitate to contact us on (+44)1753 752740 or [email protected]

Range of the week: 1.1722 - 1.1859
Variance on £10k - €137

For much of the last week GBPEUR has been relatively stable, struggling to break more than 50 points either side of 1.18. It did push lower overnight to the lowest level since the beginning of September however it has recovered slightly this morning. In a week when we are light on key data from the Eurozone, the move seems to be linked to the move in cable overnight rather than linked to any UK or European fundamentals. Proving just how erratic and unpredictable currency market can be.

The bank of England minutes helped GBP recover from these lows with policy makers indicating growing confidence in the UK recovery. The minutes made special mention of the fact that recent GBP strength would help lower inflation and therefore lessen the need for any further monetary easing policies.

Range of the week: 1.5893 – 1.6256
Variance on £10k - $363

The day before the deadline in the US, congress voted to re-open the government. The resolution is still only a temporary measure, with the current spending levels to continue through until 15th of January and the debt ceiling extended until 7th February. The initial reaction drove USD stronger before heading back in the other direction. The USD safe haven status may still limit any further moves higher, as experienced with the 1c drop overnight from the high of 1.6250.

The non-farm payrolls figure released on Tuesday (delayed due to the government shutdown) were worse than expected, announced at +148k versus an expected 180k. This raises concerns over the US recovery and if the shutdown is also shown to have hit US growth then this could lead to a delay in the much talked about tapering of the Fed monetary stimulus programme.

Range of the week: 1.6644 – 1.6847
Variance on £10k – AU$203

The key data from Australia this week was their inflation figure. CPI was released higher than expected at 2.2%, vs and expected 1.8%. This is likely to confirm expectations that we are unlikely to see further interest rate cuts from the RBA this year.

Range of the week: 1.8897 – 1.9320
Variance on £10k – NZ$423

Despite the wide range this week, there has been no key data from NZ with the recent moves linked to risk sentiment and speculative trading derived from the situation in the US.

Range of the week: 1.6464 – 1.6729
Variance on £10k – CA$265

The key figure from Canada this week was CPI (inflation). The figure released was higher than expected at 1.1%, versus an expected 1.0%. Normally you would expect this to result in CAD strength but the opposite has been the case, with GBP steadily gaining against CAD since the end of last week.

Range of the week: 15.7156 – 15.9551
Variance on £10k – R2395

No major data this week.

To refer a client please email [email protected]
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