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HiFX Market Update 28th November 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]

The last week of the month is typically quiet for data releases across the UK and Europe but still plenty to talk about with clients due to high volatility across the board, especially in the commodity currencies! It would seem that selling GBP is a huge positive at the moment and levels are attractive across most currencies, not such a positive outlook for our GBP buyers however.

£/€
Range of the week: 1.1883 – 1.2023
Variance of the week on £10k=€140

Main event this week has been the release yesterday morning of Q3 UK GDP (second estimate) which remained at 0.8pc. This was positive for sterling and we have seen the range of the pair return to the 1.20 resistance testing at 1.2003 but again failing to hold on to these gains.

Data for Europe sees German unemployment figures released tomorrow. Previously +2k – unemployment rate of 6.9pc, expectations are for this to remain flat.

Flash CPI Friday will be a focus – 0.7pc is the expectation for a dip below 0.8pc previous figure.

The EUR still trading well below general expectations in value, reeling from the effect of the interest rate cut from earlier this month.

Markets are now discussing the real possibility of a negative interest rate in Europe which was first mentioned by Draghi back in May 2013 when mentioning that the ECB “...will look at this with an open mind.” Charging investors to hold funds in a European bank overnight would hold the EURs value down, which in turn would reduce the cost of EU exports hopefully bringing a much needed injection to the economic outlook in the single bloc. Expect more momentum behind this discussion in the lead up to the ECBs next meeting on 5th December and onwards in to 2014.

£/$
Range of the week: 1.6072 – 1.6330 *high of the year so far
Variance of the week on £10k= $258

The pound moves to the year high yesterday. GBP was boosted by the positive GDP figure yesterday morning and pushed the pair through 1.6250 where the momentum carried us above 1.6325. Levels are already settling back to the 1.62 pivot.
Thanksgiving in the US today will lead to levels of illiquidity in the market over the next two days so keep an eye on impact of this while we trade at these levels.
£/AUS
Range of the week: 1.7083 – 1.7982 *Fresh high for GBP since June 2010
Variance of the week on £10k= AU$899
Huge movement in the Australian Dollar shows once again that a few carefully targeted words from the RBA governor Glenn Stevens has the power to move markets. Stevens has been discussing the option for the RBA to intervene in markets to pull the dollar down in value commenting that the option was in the monetary value “toolkit.”
''Over the last month, the significant change that occurred is that Stevens started talking of the need for a lower currency to help the economy adjust, Mr Stevens' commentary on the dollar ratcheted up a notch on October 29 when he told a Citi investment conference that ''at some point in the future the Australian dollar will be materially lower than it is today''.He stepped up his rhetoric further this month, saying the currency was ''uncomfortably high''.

£/NZD
Range of the week: 1.9248 – 2.0054
Variance of the week on £10k = NZ$806

Nothing new to report here, the NZD continues it decline following last week’s comments concerning the reluctance to increase interest rates in NZ in the foreseeable future. Levels are also being affected by its close relationship to the AUD.

£/ZAR
Range of the week: 16.2272 - 16.6770 *GBP high since October 2008
Variance of the week on £10k = ZAR 4498

£/CAD

Range of the week: 1.6813 – 1.7277
Variance of the week: on £10k = $464

To refer a client please email [email protected]
 
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