Category: Daily Look

This week in the markets: Firm dollar following FOMC statement



GBP/USD fell on Monday from a high of around 1.5740 to test support at 1.56 by late afternoon. The only noteworthy data release was a better than expected industrial production release from the States with monthly output expanding by 1.3% in November, higher than the 0.8% forecast. Things seemed to then settle, with cable sitting around 1.5650 before Tuesday and Wednesday’s key releases. Sterling also fell against the euro through Monday afternoon, dropping from 1.2645 to a low of 1.2555.

Tuesday kicked off with UK bank stress test results, of which Co-op was the only failure, followed by the BoE Financial Stability Report and accompanying speech from Governor, Mark Carney. Later in the morning, UK inflation data printed weaker than market expectations at 1% in November vs. forecasts for 1.2%, the main contributor being the recent drop in oil prices. Despite this, GBP/USD actually pushed higher as the dollar broadly weakened throughout the morning. EUR/USD pushed higher as the dollar dropped against most of the other currencies. Better than expected German flash manufacturing PMI and German ZEW sentiment data no doubt helped support the single currency, although French flash manufacturing PMI actually printed weaker than forecasted. It also benefited somewhat by the outflow of capital from Russia.

By James Mills at UKForex, an international money transfer service

Wednesday started with the news that UK wage growth picked up with earnings growing faster than inflation again whilst the rate of unemployment remained unchanged at 6%. The Bank of England MPC minutes were also released, but the voting remained unchanged. This didn’t have too much of an impact on the pound as markets looked towards the much anticipated FOMC statement. The Fed left the phrase “considerable time” in the statement, but a change in rhetoric showed it was still prepared to increase interest rates if before market anticipations. Following the release, the dollar firmed across the board with GBP/USD falling 1.25 cents to a low of 1.5550 and EUR/USD dropping from 1.2440 to 1.2325.

Improved UK retail sales numbers for November helped sterling regain a little ground against the greenback on Thursday. Year-on-year numbers came in at 6.4% vs 4.4% exp, while month-on-month posted a reading of 1.6% vs 0.3% exp. GBP’s main gains were seen against the euro with the pair jumping from an opening price of 1.2650 to above 1.2740 by the end of European sessions. Despite Thursday afternoon’s better than expected US jobless claims, GBP/USD steadily rose hitting just under 1.5675. The pound seemed to be holding its ground at the start of Friday, as public sector net borrowing numbers showed a narrowing in the UK national account deficit but we have since seen it fell against both USD and EUR.

Looking ahead to next week, Tuesday is shaping up to be the key risk event day as the UK and US post Q3 GDP numbers. The US also releases November’s US durable goods orders and consumption expenditures. Wednesday will be quieter with only US jobless claims ahead of the Christmas break.

In our latest podcast, we run down all aspects of the Fed decision, discuss the running down of oil, the run down Russian ruble and the weak currency down under:

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Closing last full trading week of 2014

Closing last full trading week of 2014

We reach the last day of the last full trading week of 2014. Yesterday was all about equities and the reversal of some of the recent losses in the wake of the FOMC press conference. We’ve seen these gains mirrored in Asia, which should provide a firmer open in Europe. Some stability has emerged on

EURUSD, GBPUSD, USDJPY TA & Pivot Points – Dec. 18 2014

EURUSD, GBPUSD, USDJPY TA & Pivot Points – Dec. 18 2014

EURUSD Daily Pivots R3 1.2657 R2 1.2586 R1 1.2463 Pivot 1.2391 S1 1.2269 S2 1.2196 S3 1.2074   EURUSD failed to break above the resistance of 1.257 levels and promptly shifted lower and is currently supported by the falling trend line. If this level holds, we could see a move higher, preferably above 1.23695 which

Russian ruble stabilizes

Russian ruble stabilizes

In 564 words, the US Federal Reserve yesterday told us that policy may rise next year, but it may not. The pre-meeting speculation centred around their stated intention to keep rates near zero “for a considerable period”. Now, they can be “patient” in normalising policy, but state that this consistent with their previous language. So,

Fed decision day

Fed decision day

The last full trading week of the month is proving to be nothing if not action packed. Yesterday, it was all about the rouble. Russia’s currency was essentially out of control in the wake of the rate hike, with liquidity also being sucked out of the international markets for the currency. The choice facing the

FX Volatility Heats Up; Fed in Focus

FX Volatility Heats Up; Fed in Focus

There has been little in the way of reprieve from volatility in financial markets recently, with the oil rout incentivizing a fresh wave of risk aversion that has sent global equities into retreat this morning.  In an effort to curb the exodus of capital induced by crumbling oil prices, the Russian Central Bank stepped into

EUR/USD, USD/JPY, GBP/USD Pivot Points TA – Dec. 16 2014

EUR/USD, USD/JPY, GBP/USD Pivot Points TA – Dec. 16 2014

EURUSD Daily Pivots R3 1.2535 R2 1.2506 R1 1.2471 Pivot 1.2442 S1 1.2407 S2 1.2378 S3 1.2343   EURUSD was trading within a range after making an intraday high to 1.2477 yesterday and has been trading right above the major support/resistance level that we have been watching. A bullish reversal later during the US trading

Ruble in free fall

Ruble in free fall

Last night, the Russian central bank removed any doubt that Russia is currently facing a currency crisis. Having hiked rates by 100bp last week, the central bank put rates up by a further 650bp to 17% overnight. This was aimed at “limited substantially increased rouble depreciation risks and inflation risks” according to the accompanying statement,

All eyes on US rate decision

All eyes on US rate decision

The Japanese election results were always about the extent of Abe’s victory, rather than whether he would win. The headline results were positive, with two-thirds of seats won in the lower house, but voter turnout was at a record low, which says a lot about voter apathy towards the further reforms Abe was supposedly trying

Economic Divergence Amongst the US and China Continues

Economic Divergence Amongst the US and China Continues

The overnight session started off with weak industrial output data from China, adding to the confirmation of the country’s economic slowdown. Once increasing by close to 20% back in 2010, the country is now seeing industrial output rising only 7.2%, slower than the 7.6% expected, when compared to the previous year. The rise in industrial