Analysis

The situation in Greece continues to dominate the markets and news flow. The recent election of the anti-austerity Syriza party has led to uncertainty as to whether Greece will leave the single currency. Alexis Tsipras the new PM, is locked in crucial talks to negotiate funds to ensure that the country doesn’t default on its commitments. With only two weeks of leadership, the moves by Tsipras are radical, and could have catastrophic repercussions. An exit from the Eurozone would…

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The Greek people elected a new government to power on the 25th January; Syriza are an anti-austerity party led by Alexis Tsipras. They were elected as the people have suffered through the stringent austerity measures dictated under international bailout agreements. Without an end insight and significant economic improvement the Greek people have voted for change. Greece’s financial stability and future EU membership is in question, as Tsipras attempts to negotiate alternatives,…

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The UK property market (especially London) is regularly cited in the press as having overheated, with the disparity between income growth and prices growing exponentially. Following the financial crisis prices have pushed higher with double digit year-on-year growth in certain regions. Inflows of hot money from Russia, China (HK), Ukraine and peripheral European countries have led the growth in prime locations. Buy to let investments provide a relatively stable yield alongside the expectatio…

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The Peoples Bank of China, made an unscheduled announcement to cut the reserve requirement ratio (RRR) by 50bps to 19.5%. The announcement follows a wave of central banks cuts in January, in an attempt to fuel growth. The PBoC cut reduces the amount of cash banks are required to hold in reserve, in an attempt to stimulate the economy, or at least keep the economy stable. Concerns from analysts that the Chinese growth levels fuelled by credit were unsustainable have been noted continuou…

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Trading forex (FX) and CFDs are deemed as a “high risk investment” and it is possible to lose more than you initial investment. Understanding the risks when trading is a key part of developing your trading plan. Before you place a live trade, ask yourself questions like; “Do I know how to use this trading software?” Abshire-Smith offers 3 different trading platforms. If you are new to one of our platforms, then we would recommend that you open a practice t…

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Andy Haldane, the Bank of England’s Chief Economist and member of the MPC spoke with a regional newspaper on Wednesday while touring North Wales and speaking with business.. He was quoted as saying to theDaily Post“We are in no rush to raise rates, the recovery is taking hold nicely, the last thing we want to do is knock the stuffing out of that.”Comments like this do confuse the market, with the current consensus for a Q1/2 2015. He continued on to say “People…

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The estimate for UK Q4 GDP missed expectations, with a slightly softer reading of 0.5%, versus the median expectation of 0.6%. The economic growth for the UK economy has become sluggish, during the worst period of the economic crisis, GDP contracted by 6.0% (Q1 2008 - Q2 2009). In the last MPC minutes Weale and McCafferty were shown to have changed their stance, and voted to leave interest rates unchanged in a 9-0 consensus. The latest economic data gives the MPC members time to consid…

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On Thursday ECB President Draghi announced his “Big Bazooka” the ECB quantitative easing programme (QE). The central bank announced a slightly larger bond-buying programme of €60 billion per month into 2016. This is a significant amount of “money printing” which is an attempt to stimulate growth within the Eurozone. The announcement had been widely priced in following tactical leaks to the press prior to the event. EURUSD Since March 2014 the Euro aga…

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The European Central Bank (ECB) is expected to announce quantitative easing (QE) at their policy meeting in Frankfurt. The market expectation is for an injection into the economy of €1 trillion into the Eurozone, therefore this belief is priced into the current market prices. The Euro has weakened, and Gold has been bid in recent days, however yesterday on the source (WSJ )that the ECB would buy roughly €50 billion of bonds per month, the Euro rallied and Gold softened. Traders att…

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The Bank of England released the minutes for their meeting held on 7 and 8 January 2015. At recent meetings two members voting for an increase of in interest and a 9 – 0 vote for leaving asset purchases unchanged. Current policy; Interest rates: 0.5% Asset purchases (QE): £375bn Last month’s inflation rate for the UK at 0.5% the joint lowest reading on record seems to have been the leaning factor for McCatherty and Weale to switch their votes. Infla…

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Today is a US public holiday (Martin Luther King Day), with minimal economic announcement and certain US markets closed, trading volumes and liquidity are lower. Last week was a watershed moment for modern foreign exchange trading. The surprise move by the Swiss National Bank (SNB) to remove the EURCHF currency floor (1.20) shocked markets. The SNB has lost its credibility with investors, who feel betrayed by the sudden alteration in policy. The SNB has allowed the Swiss Franc to appre…

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Following the move by the Swiss National Bank on Thursday to remove the exchange rate floor of 1.20, Gold traded 2% higher as investors found a safe haven. The yellow metal continued the surge higher during Fridays trading reaching a new multi-month high of $1281/oz. Some analysts had thought that investors may need to sell Gold to cover margin calls due to the dramatic move in the currency markets and meet their obligations. The safe haven flows persisted pushing the metal higher.…

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16-01-2014 On Thursday 15 January 2015 the Swiss National Bank (SNB) unexpectedly removed the EURCHF exchange rate floor (1.20). This led to a sudden movement in the market with extreme volatility and erratic liquidity with some companies printing a low of below 0.8000. There have been significant and long-term repercussions within the foreign exchange industry for some brokers; FXCM (NYSE:FXCM) announced a deficit of $225 million IG (LON:IGG) have announced a £…

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The Swiss National Bank shocked traders on Thursday by removing the EURCHF exchange rate floor. The unexpected move led to exceptional moves in the currency markets. The artificial exchange cap of 1.20 EURCHF has been in place since 6 September 2011. The volatility caused drastic moves, with minimal liquidity, as it seems that the central bank hadn’t realised the repercussions of their actions. The cap had been put in place to stem the strengthening of the Swiss Franc from safe h…

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