Analysis

During the early part of the US session yesterday Sterling was bid in FX space, reversing recent declines. Mervyn King current Governor of the Bank of England had a pre-recorded, exclusive interview with ITV News (British News Channel) however the price action indicates that this could have been leaked. King said that the recovery is finally “in sight,” only a short time after he changed his stance and voted for further quantitative easing. In the interview he said that if you re…

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Bank of England chews over negative interest rate plan - CityAM Sterling has steady following its recent rapid decline, though the cable is currently unable to break the psychological 1.50 level The unemployment rate has remained steady at 5.4 per cent in February as the Australian economy added 71,500 jobs, the biggest monthly gain in 12 years -SMH Bank of England's Bailey warns that UK banks need more capital, this idea is controversial as some believe higher capital…

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IndexTrader Magazine, includes some comments that Joe Bond (VP of Trading) made regarding the recent move in Sterling. A link to the full PDF edition can be found here: http://www.index-trader.co.uk/wp-content/uploads/backissues/IndexTraderMarch2013.pdf This link is hosted on an external website (Index-Trader Magazine) and Abshire-Smith cannot be held responsible for its contents.…

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NIESR released their forecast for UK growth yesterday afternoon, for the 3 months to February of -0.1%, signalling the likelihood of a triple-dip recession. Worryingly their report details that they expect “output to pass its peak in early 2008 until 2015.” FTSE 100 closed at a new 5-year high as investors shrugged of concerns following poor UK macro data Sterling strengthened throughout the US and Asian sessions, after trading at 2 and half year lows in recent days…

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Dow Jones closed at an all-time record high of 14,254 FTSE 100 touches a post Lehman Brother’s intra-day high 6,342 British manufacturers must not be “blindsided” by the importance of trading with Europe because the “big future for exports” is with emerging markets, according to Jim O’Neill, chairman of Goldman Sachs Asset Management - Daily Telegraph Capital flight from Cyprus has accelerated since eurozone politicians began threatening…

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China's February non-manufacturing PMI like manufacturing, slowed to a 5-month low of 54.5 versus 56.2 in January, reinforcing the view that the recovery in the world’s second largest economy remains modest Bernanke said that premature rate increases would carry a high risk of short-circuiting the recovery The North/South house price split in the UK: According to the latest Hometrack survey, more than three-quarters of postal areas registering price gains are in London…

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European Central Bank President Mario Draghi signaled the bank has no intention of tightening monetary policy anytime soon with inflation projected to “significantly” undershoot its 2 percent target next year - Bloomberg Royal Bank of Scotland (RBS) has reported its fifth annual loss since it was rescued by the government in 2008. Pre-tax loss of £5.16bn includes past conduct charges of £1.1bn for PPI settlements, £700m for interest rate swaps and a £…

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Deputy Governor of the Bank of England Paul Tucker, appearing before the Treasury select committee yesterday mentioned the radical idea of negative interest rates. It seemed more of an idea, rather than the groundwork for future policy, but it highlighted the bank does have other options left to help the economy. The idea is based upon the notion, that banks are currently parking considerable sums on deposit with the central bank for safety, rather than lending to individuals and businesses.…

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There has been speculation for some time that the UK, would lose its coveted AAA credit rating, as the coalition struggles to meet its fiscal targets and growth continues in a “zig zag” fashion as coined by Mervyn King. The downgrade is an embarrassment to the Chancellor George Osborne, as he had said that keeping the top credit rating would be a measure of his and the coalition’s term. This is the first downgrade in the 25 years that Moody’s has been rating debt. Ana…

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The foreign exchange (FX) market is decentralised and predominantly executed over-the-counter (OTC). In the majority of spot FX positions, the trader is required to take delivery of his currency T+2 (settlement two days after the transaction date). However if a trader doesn’t want to take delivery of his position, then it is “rolled” into the next day. This occurs each day at 5pm ET (New York) and the positions are effectively closed and then reopened for the next trading d…

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Foreign Exchange Direct Market Access (DMA) Originally the majority of retail traders were unable to access the direct underlying market due to the size and frequency of their trades. Trading was originally restricted to banks, inter-dealer brokers, hedge funds and local (proprietary) traders. The OTC market is based on bilateral credit lines between institutions, which have counterparty risk. As technology has advanced, electronic screen based trading and opened up trading to t…

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Brussels turn up pressure on Libor - Financial Times The UK’s OBR said that faster tax growth or lower than forecast public spending will be required for the government to meet its deficit forecast The BoE has a case for restarting its QE, and may need to increase it by up to £175bn if the economy is running substantially below capacity -Daily Telegraph WTI Crude rebounds; set for biggest weekly drop Since December –Bloomberg This morning upbeat comm…

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Bank of England: MINUTES OF THE MONETARY POLICY COMMITTEE MEETING 6 AND 7 FEBRUARY 2013 Full Bank of England PDF: http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/pdf/2013/mpc1302.pdf This link is to an external website (www.bankofengland.co.uk) and Abshire-Smith cannot be held responsible for its contents.…

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HSBC Global Head of FX Research David Bloom calling forUSDJPYat 75 over the next couple of years –Reuters Sterling hits seven-month low on dollar - CityAM European proposals to curb bank bonuses will lead to higher salaries and a less stable financial system, Britain has argued, in a last ditch attempt to water-down rules that threaten the City - Daily Telegraph A few members of the Bank of Japan's policy board thought the BOJ could extend the remaining life of Ja…

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