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HiFX Market Update 9th 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: 1.1797 – 1.1998
Variance on £10k - €201

Major data out this week showed sterling had a slight reduction in Construction PMI down to 58.9 from 59.1. Services PMI was as expected at 60.3. Spanish unemployment came out worse than expected seeing an increase in claims to 25.6K against an expected 12.3K showing that despite an economic recovery on the cards, it hasn’t quite filtered down to more jobs yet. The ECB met on Wednesday, keeping the benchmark interest rate unchanged, and decided against further action to sustain a recovery hoping it could carry itself under its own steam however many analysts were keen to point out that it may struggle to build on improvements in recent months. The IMF announced this week an increase in UK economic growth with figures revised up from 0.9% to 1.4%. This was in opposition to its overall view on the global economy which was revised down 0.3% to 2.9%.

Range of the week: 1.6005 – 1.6250
Variance on £10k - $245

The US government shut down continues, threatening to disrupt the recovery the US has recently been experiencing. Should Congress fail to raise the borrowing limit, set to be reached on 17th October, the US could begin to default on its debts. Obama who is keen to hold talks with the Republicans, said a US default could:
“Disrupt capital markets, undermine international confidence in America, permanently increase the nation's borrowing costs, add to its deficits and debt, and pose the "significant risk of a very deep recession". Something to be avoided then.

A mixed bag of data this week from the US. Non-Farm Payrolls and Services PMI coming in under expectation with little change in unemployment claims.

The President is set to nominate Janet Yellen as the next head of the US central bank today. The first woman to head the Federal Reserve, she will replace Ben Bernanke who has served for 8 years. She will have the uphill struggle of trying to wean the global economy of cheap money, as just the hint the US would start tapering its asset purchase program threw markets into turmoil.

Range of the week: 1.6956 – 1.7390
Variance on £10k – AU$434

Data released this morning shows an improvement in business confidence with numbers trebling to 12 from 4. The data shows modest improvement in the non-mining sectors leading to the hope that unemployment rate should remain unchanged when data is released tomorrow.

Sterling was down over a cent to 1.6909 against the Aussie this morning with further falls expected upon release of positive data.

Range of the week: 1.9224 – 1.9742
Variance on £10k – NZ$518

Nothing major from NZ this week aside from NZIER Business Confidence coming in better that expected pushing the dollar to the low of the week. Aside from this, major moves with this pair can be attributed to weak UK data released today resulting in sterling getting sold off across the board.

Range of the week: 1.6469 – 1.6809
Variance on £10k – CA$340

Disappointing data from Canada this week with PMI, building permits and trade balance all coming in under expectation however the initial moves have been reversed in light of the UK’s disappointing data this morning.

Range of the week: 15.92 – 16.44
Variance on £10k – R5200

No major data out this week for the Rand, however it has been moderately boosted against the pound due to an expansion in China’s services sector. This came in lower than previous however still above the 50 mark indicating growth and supporting SA’s trade prospects with the world’s second largest economy.

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