Archive - March, 2015

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The latest data from the Office for National Statistics estimates that in 2014, the UK economy grew 2.8% across the year, up 0.2% from previous estimates. In Q3 and Q4 of 2014 the economy expanded by 0.6%. Growing at a faster pace than previously estimated, has been boosted by strong export performance. There had been concerns that the weakening of the Euro, could harm exports as the Eurozone is the UK’s major trading partner. GBP In the FX markets EURGBP traded lowe…

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The official starting gun for the UK general election has begun, as the current Prime Minister David Cameron ceremonially visits the Queen to dissolve parliament. The coming UK election is likely to have no overall majority and is one of the closest modern elections. What does this mean for Sterling? The uncertainty of the electoral outcome is a risk to the UK’s currency. The two main parties (Conservative and Labour) will need to create a coalition to form a government but…

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The crisis in Yemen has escalated towards an all-out civil war. The president of Yemen, Abdrabbuj Mansour Hadi is reported to have fled the country as forces attempt to fight back against Shia rebels known as Houthis. The Houthis are reportedly backed by Iran and been extending their control over the country since September. On Wednesday Saudi Arabia launched air strikes against the Houthis in support of the “legitimate government,” which has subsequently been condemned by…

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The ONS has released the inflation data (CPI) for February, which has fallen to zero. Governor of the BoE Mark Carney had warned markets that in the near term inflation would fall, but in 12 months pick up quickly. The latest release from the ONS is the lowest level for CPI since inflation estimates began in 1988. The ONS release highlighted the slowdown in inflation to price movements in recreational goods, food and furnishings. This reading was key for policy makers as the primary impact f…

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The fear of Greece leaving the single currency (Grexit) has been a recurring theme since the collapse of Lehman Brothers. The country has only remained within the Eurozone via multiple bailouts from the IMF, otherwise the country would have defaulted on its commitments and been forced from the currency union. At the latest election, the citizens of Greece voted for the anti-austerity Syriza Party which are playing hard ball with Brussels as the country verges on bankruptcy. The leader…

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Bank of England Minutes 9:30am At 9:30am London the Bank of England minutes for the MPC meeting held on the 4 and 5 March will be released. The expectation is that the members voted unanimously (9 - 0) to leave interest rates and asset purchases unchanged. Traders will be checking through the minutes of the meeting for any signals of the timing of the tightening of policy. This month is six years that the base interest rate has been held at the record low of 0.50%. Employment da…

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The German index the DAX 30, has traded to a new all-time intra-day high this morning, trading above 12,000 for the first time. The German economy is seen as the powerhouse of Europe, with a robust economy and major exporter. The weakening of the Euro couple with record low borrowing costs, and lower energy costs are ideal circumstances for further expansion of the German economy. The stimulus announced by Draghi has led to traders bidding the index record high on the belief that the s…

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On Thursday comments from governor of the Bank of England weighed on the pound, with the sentiment following through into European trade on Friday. The pound weakened to the lowest value against the US dollar since July 2013. Disappointing data released by the ONS, showed that construction output had collapsed by 2.6% in January compared to December. Next Wednesday (18 March) the Bank of England releases the minutes from their meeting held on 4 and 5 March. The March rate announcement…

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Governor of the Bank of the England spoke at the University of Sheffield Advanced Manufacturing Research Centre and dampened market expectations of policy tightening. Carney explained that the Bank expected interest rates to return to target (2%) within 2 years, which is significantly higher than January’s record low reading of 2%. The rhetoric from MPC members has been confusion for traders attempting to gauge the expected timeframe of policy tightening. UK interest rates have r…

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The Eurozone’s single currency seems to be heading towards parity against the US dollar, starting the year above 1.20, now trading 1.0650. In March 2014 EURUSD traded just shy of the 1.40 mark, the story is driven by the divergence in economic situations between the US and the European periphery. Following Draghi’s announcement of QE the sentiment towards the Eurozone has turned sour. Greece’s potential exit from the single currency has unnerved investors with the cur…

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The US Department of Labor will release their monthly employment report, Non-Farm Payrolls at 13:30pm (London). The pivotal data is usually released on the first on the first Friday of each month, and is a good barometer of the health of the US economy. The figures vary widely, causing significant volatility at the time of release as traders react to the figures. The market consensus is for the Fed is to begin tightening in June with economy growing Yellen will begin exiting the ultra-…

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At noon the Bank of England’s Monetary Policy Committee (MPC) will announce if there is a change to interest rates or the asset purchase programme. The current base rate is 0.5% and today’s announcement marks six years since the MPC cut interest rates to the record low. The expectation is a vote for rates and QE (£375bn) to be left unchanged. The Bank of England’s MPC remit is to target 2% inflation, over the last few years the economy consistently overshot as t…

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The latest indicator for the UK economy; Markit Services PMI (Feb) 56.7 vs consensus of 57.4, this follows beats in manufacturing data. Following the release GBPUSD has been offered and weakened against the US dollar. Prior to the release GBP reached a new 7 year high against the Euro. The figure service sector growth is still a strong figure, however it is slightly below expectations. A positive from the data release was the that “new business increased at sharpest pace for thre…

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At the end of last week the Yuan weakened to the lowest level in 2 years. On Saturday the Peoples Bank of China surprised markets and cut the lending and deposits rates, for the second time in 4 months. The move is an attempt to ease monetary policy to fuel further growth. Following the move, miners got a lift as traders expect Chinas expansion to increase their demand. The Australian dollar also was buoyed, as a major trading partner of China, and a key exporter of commodities.…

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