Analysis

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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Over the last few decades Chinese growth figures have been the envy of central banks around the globe. The back-to-back years of double digit GDP have now slowed to “only” around 7%. Recent macro data from China has disappointed markets, with the indicators pointing to a further slowdown in economic growth. The expansion has been coupled with inflation, however data released in January reported a 5 year low. On the 4 February the PBOC attempted to stave off a further slowdo…

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Macro Outlook UK General election A major potential risk for Sterling over the short to mid-term is the potential of an inconclusive majority in government with the coalition discussions being drawn out. The recent polls for the election don’t show a conclusive majority for either of the major political parties, with one of the minor parties expected to be the maker of any coalition leadership. Bank of England rate hike The market has priced in a rate hike for Q…

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The FTSE 100 is edging closer to its all-time record high reached on the final day of trading in 1999 at the height of the tech bubble. The components of the index are heavily weighted by financial and commodity companies that have had significant declines over the last 15 years. The index is isn’t a proxy for the growth of the UK economy due to the high percentage of global exposure from earnings for the components. FTSE 100 currently trading 6910, the record intra-day high is 6…

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Greece is currently in final talks with Eurozone finance ministers regarding the countries impending bailout. If no agreement is met, then ultimately Greece would be unable to make its debt repayments and default on its obligations. This would then set a painful set of events, as Greece leaves the single currency, with measures such as currency controls. The Euro wasn’t developed with an exit plan built in, so the move would have disastrous effects for the Mediterranean country.…

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The Bank of England minutes for 4 and 5 February headline announcements were as expected, the MPC voted unanimously (9-0) to leave interest rates and quantitative easing unchanged. The current ultra-loose monetary policy is interest rates at the record low of 0.50% and asset purchases (QE) at £375bn. The ONS released the ILO Unemployment for February with the rate dropping to 5.7% below expectations of 5.8%. The UK claimant count fell to 823,000 in January, lowest since May 2008,…

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The latest inflation data released from the ONS shows is the lowest in 25 years, well below the Bank of England’s target of 2%. During the height of the economic crisis, inflation continually overshot the central bank’s target at a time of austerity and increases in unemployment. Wage stagnation and high inflation led to a squeeze on wage growth and played its part in a slow economic recovery. When inflation overshoots targets the normal practice is to raise interest rates…

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Today is a public holiday in the US (President's Day), volumes are likely to be lighter in afternoon, and certain trading hours are affected. The above trading times are dependent on our liquidity providers, and are accurate to the best of our knowledge. If you have any questions regarding the trading hours please contact us.…

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