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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: 1.1647 - 1.1934
Variance of the week on £10k=€287
The Pound has been on a very good run for the last few days, with more signs of the UK economy having turned the corner and these “green shoots” of recovery showing signs of forming into fully fledged foundations for the basis of our recovery. UK PMI Services data came in at 62.5 against expectation of 59.8 and an increase on last month’s reading, it was actually the best reading since May 1997. Remember this is a gauge of future demand and gives a picture of the future of the service sector which makes up around 75% of the UK economy and has been seen as the major driving force behind the upturn we have seen. Story here
In addition to this the NIESR have stated that they believe UK interest rates could increase as early as 2015 now to stop the economy overheating, most analysts had previously expected rates to increase around 2016 based on the Bank of England’s forward guidance and this is another reason for recent Sterling strength. The is now real reason to believe the Bank of England will increase its growth forecast in next week’s quarterly report.
In contrast to recent good UK data the Euro-zone has had a run of less than favourable data, including higher unemployment and a rather worrying drop in inflation. Last week CPI inflation come in at 0.7% compared with expectation of 1.1%, this has lead to some fears of a “Japan style” deflationary period and now means all eyes are on Thursdays central bank decisions with the ECB and BoE announcing any further measures to stimulate growth. However, given the good news here in the UK the main focus is on the ECB tomorrow as there is now very real room for them to cut interest rates tomorrow if they felt it was appropriate.

Range of the week: 1.5903 – 1.6117
Variance of the week on £10k= $214
The US has been relatively quiet in terms of data so far this week, as the economy starts to move away from the government shut down and head back to normality. The US debt ceiling has been extended out until February so this will again start to be a focus of Dollar strength/weakness over the coming months. We do have two pieces of key data with US GDP due out on Thursday and as always eyes are on the employment figures due on Friday in the form of Non-Farm payrolls.

Range of the week: 1.6760 – 1.6936
Variance of the week on £10k= AU$176
Australia is still attempting to understand just how bad their slowdown is going to be. Many forecasters do not expect it to be as bad in comparison to Western economies recent woes because of their very close links with Asia and demand for their exports, mainly driven by their powerful mining sector. On Monday retail sales were up 0.8% from the previous month showing the Aussies are still keen to be spending and yesterday the RBA held interest rates at 2.5% in line with expectation. Unemployment figures are due out tomorrow with a slight increase expected from 5.6% to 5.7%.

Range of the week: 1.9119 – 1.9443
Variance of the week on £10k=NZ$324
In New Zealand, employment figures held strong with no change and their economy keeps ticking along without any major concerns on the horizon. With this relative calm we have seen the NZ$ remain strong and even gain some ground back on Sterling despite its recent run of good data.

Range of the week: 15.8844 – 16.4646
Variance of the week on £10k=ZAR5,802
The Rand remains under pressure and we have seen Sterling hit a new 4 year high of 16.4646. It remains to be seen whether the Pound, given its recent good run, can push upwards towards the next psychological level of 17!

Range of the week: 1.6578 – 1.6836
Variance of the week: on £10k=$258
No major news or data for the week so far. Employment figures due out on Friday however.
To refer a client please email [email protected]
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