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Market Report 15th September 2016

CURRENCY SNAPSHOT

GBP – The jobs related data out yesterday for the UK came in mixed. This will put the focus for the pound on the Bank of England’s interest rate decision out today.
USD – Crude oil inventories hardly had an effect yesterday, however all eyes will be on data to be released this afternoon in the US, relating to inflation and unemployment.
EUR – Inflation data and trade balance figures are to be released today for the euro area, however this will likely be overshadowed by releases from the UK and US.

ROUNDUP

Yesterday we saw a mixed bag of employment related data released for the UK. Average earnings was higher than expected, however claimant count came in worse than predicted. The pound continued to lose ground again throughout the day, with the Sterling to euro and US dollar rates hovering around 2 week lows.

French inflation data came out in early hours of trading, and were in line with expectation and hence had a minimal effect on the value of the euro.

Crude oil inventories were released in the afternoon for the US, which although it is not directly related to the US economy, it does often move the dollar as it is the currency that oil is traded in.

COMING UP

Today is a very important day for the UK, being the so-called ‘Super Thursday’. The Bank of England release their official interest rate decision at midday. Members are expected to vote in one fashion, all being for keeping interest rates the same, but the statement given afterwards by Mark Carney could give the market an indication of what lies ahead for the BoE.

We also have retail sales out in the morning, but unless this is drastically out of line with what the market expects, it may not cause any big movements.

The US also have some key information to be released in the afternoon with Retail sales, Phili Fed Manufacturing index, Unemployment data and PPI data coming out. With the Fed’s interest rate statement out next week, all eyes may be on these figures to possibly gauge the US’s current economic conditions.

The Fed’s focus has been mainly on jobs data with relation to interest rate changes, so the unemployment rate figure could be key to their decision next week.

In early hours of the morning the Swiss National Bank decided to keep their interest rates at -0.75%, which was as the market predicted and hence caused no real movements in the Swiss Franc.

Thursday 15 September 2016, 10:12am

Market Report 25th July 2016

CURRENCY SNAPSHOT

EUR - With growth rates tumbling, inflation barely positive and the Italian banking system in crisis, the euro could have a troubled week.
GBP - The pound will look for support from a decent GDP result this week, but could stumble on consumer confidence.
USD – Focus will be on the Fed this week, as markets look to see if the US is still inline for another interest rate hike.

ROUNDUP

The UK saw inflation and unemployment improve at the start of the week helping the pound rebound higher against the euro and US dollar on Wednesday, however poor retail sales and manufacturing and services figures for July disappointed and caused a sharp fall on Friday, erasing earlier gains.

In the Eurozone, the European Central Bank’s kept its interest rate on hold and in the monetary policy statement, ECB President Mario Draghi indicated that rates will remain at the current levels or lower until March 2017 and the asset purchasing programme was also confirmed to be extended beyond March 2017.

COMING UP

A light calendar for economic data releases from the UK this week is likely to mean markets turn to geopolitical news for direction, with anything Brexit related being watched closely. UK GDP will be released on Wednesday with a slight improvement expected which could bolster the pound. However, consumer confidence on Friday is expected to fall sharply and as a result pressure the pound at the end of the week.

With the major releases of the week scheduled for Friday, it'll be a busy day for the euro. GDP for the Eurozone is expected to have halved from the first to second quarter this year and inflation is expected to remain barely positive. In addition European banks will undergo a health check which is likely to highlight the extent of the troubles in the Italian banking system, as analyst believe that banks could have €360bn in near worthless debt.

Consumer confidence will be the first release from across the pond on Tuesday, with expectations for a fall, which could see the dollar lose some momentum. However this may be short lived as durable goods orders are likely to show a small improvement on Wednesday ahead of the Fed rate decision. Whilst no change is expected from the Fed, attention will be paid to any forward guidance for possible rate hikes this year. GDP and inflation data will close out the week, with a strong performance expected here the dollar is likely to strengthen.

Monday 25 July 2016, 09:49am

Market Report 18th July 2016

CURRENCY SNAPSHOT

EUR: ECB Interest rate decision and monetary policy statement in focus this week.
GBP: Inflation, jobs and manufacturing figures will be in focus for the pound.
USD: US figures out on Thursday will be the key mover for dollar moves this week.

ROUNDUP

Sterling had a good week, finishing 2.54% higher against the US dollar and 2.40% against the euro.

Sterling was initially buoyed by Andrea Leadsom stepping down from the Tory leadership contest and with Theresa May being announced as Prime Minister. Sterling received another boost on Super Thursday with the Bank of England holding interest rates at 0.5% and only one member of the Monetary Policy Committee voting to cut interest rates.

However BoE Chief Economist Andrew Haldane took out sterling optimism on Friday by one again reiterating that the Bank of England must unleash monetary easing measures in August as a fallout from the Brexit vote.

Elsewhere the only significant news saw the Bank of Canada hold interest rates at 0.5%, Eurozone inflation remained near to 0% and the US dollar finished on a high at the end of the week with retail sales climbing in June suggesting a strong second quarter. However, US inflation did disappoint remaining at 1%.

COMING UP

In the week ahead, investors will be focusing on the outcome of Thursday’s European Central Bank interest rate decision and Mario Draghi’s accompanying speech. Interest rates are expected to remain at 0%.

The UK is to release what will be closely watched reports on employment, inflation and manufacturing activity. We could see sterling start the week well, as Inflation and wages are expected to have improved for June. However given that retail sales and manufacturing and services are expected to drop, we could see any gains then erased by the end of the week.

The main bulk of US data will be out on Thursday, with the release of data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.

On Tuesday The Reserve Bank of Australia is to publish the minutes of its latest monetary policy meeting, giving investors insight into how officials view the economy and their policy options.

Monday 18 July 2016, 10:36am

Darren Kilner

Darren Kilner

Head Of FX & Dealing

Email Darren

Call us on 020 7778 9350