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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: 1.1967 - 1.2117
Variance of the week on £10k=€150

Monday started with Manufacturing PMI data for both the Euro-Zone (EZ) and the UK. The UK came out at 58.4 against expectation of 56.1 where as in the EZ it was 51.6 against 51.5. So 1-nil to Sterling and it started the week as it finished last, through 1.20. On Tuesday it was the turn of UK Construction PMI which came out at 62.6 against expectation of 59.0 so again a very positive reading for the UK which continued the strong run of recent weeks. It took until yesterday for the EZ to strike a blow back when Services PMI data came out. The EZ posted above expectation 51.2 (mainly thanks to Germany) where for the first time in a few weeks UK data came out softer than expected at 60.0/62.0. This was the signal that Sterling may have reached its high point of 1.2117 and meant a move back into 1.20 territory.

EZ growth figures (GDP) again disappointed at -0.4% and backed up the concerns for the single currency but with this in line with expectation it had little impact with exchange rates as the market waiting for the big day of the week (today!).

We started at 11:15 with the Autumn Statement from George Osborne. Although watched by the market, a lot of the information is leaked in advance so no real surprises. Growth forecast for this year increased from 0.6% to 1.4%, revised up for next year from 1.8% to 2.4%, but then down slightly for the following three years to 2.2%, 2.6%, and 2.7%. Apart from that we are all going to be working for longer! The Bank of England, while George Osborne was giving his statement, advised no change in interest rates, QE or their limits with forward guidance. – so no surprise there.

Next up it was the turn of the ECB – no change to their interest rate at 0.25% but the conference afterwards where Mario Draghi proved to be the talking point the markets were hoping for. Mr Draghi stated that there would be no immediate change to their monetary policy as any changes (last month’s rate cut) will take time to take effect and they would not change course based on one piece of data. However he did admit the Euro-Zone remained subdued - These comments gave the Euro the shot in the arm it has needed over recent days and sent GBPEUR below 1.20 for the first time in 6 days.

So after a week of each currency trading blows we are now back to a similar position to recent weeks with Sterling needing to find a second wind to break back up and through to its high of 1.2117.

Range of the week: 1.6308 – 1.6441
Variance of the week on £10k= $133

The US has posted some strong figures this week with manufacturing and GDP coming in above expectation. We have however seen Sterling reach a high of 1.6441 due to its own recent run of good data and signs the UK recovery is here to stay. As with every month all eyes this week are on Fridays non-farm payroll data and unemployment figures with the jobless rate expected to fall from 7.3% to 7.2%.

Range of the week: 1.7902 – 1.8191
Variance of the week on £10k= AU$289

The RBA is doing its best to try and move the exchange rate upwards without actually physically intervening (known as verbal intervention). They kept interest rates on hold, but again stated the exchange rate was too low and this saw us break through 1.80 and then eyes move to the next physiological level to 1.90. Time will tell if the Pound can continue its recent rise of 37 cents in 8 months!

Range of the week: 1.9843 – 2.0238
Variance of the week on £10k=NZ$395

No major news or data for the week so far however following a similar pattern to the AUD$ as has touched through 2.02 this week.

Range of the week: 16.5939 – 17.2593
Variance of the week on £10k=ZAR6, 654

No major news or data for the week so far. However trading through 17, the best rates since 2009!

Range of the week: 1.7247 – 1.7546
Variance of the week: on £10k=$306

Rates were kept on hold by the Reserve Bank and Sterling continued to make gains against the Dollar completing its good week across the board. Unemployment figures due out tomorrow with no change expected in the jobless figure.

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