feedback
Angus Campbell

Euro’s turn to defy gravity

The euro has held up very strongly in the face of mounting concerns that Greece will soon have to leave the Eurozone. The IMF have been very vocal in their concerns that Greece is on the cusp of either being late with one of its up and coming repayments or missing it altogether, with the next €200 due on 1st May (a Bank Holiday for most), followed by another €770m on 12th May. This will be averted if reform negotiations are concluded by 24th April and bailout funds are released, but few in ...

Angus Campbell

Aussie defies gravity

The big stand out from last night was the Aussie which has spiked on the back of a much unexpected decline in unemployment. AUDUSD is now back in the mid 0.7700 area marking a two week high as the Australian economy created more than double the amount of jobs expected in March and February’s rise was revised upwards almost threefold. The Aussie has also benefitted from strength in commodities as crude prices have also spiked on the back of a drop in US production and oil stocks. A number of ...

Angus Campbell

Concerns rise over Chinese economic slowdown

Chinese GDP data overnight has fallen to its lowest level for six years and whilst it is in line with expectations a little risk aversion has set into the markets overnight and this morning. It is the industrial production and retail sales numbers that have worried investors causing Asian stocks to decline during their session and the dollar has perked up recouping some of yesterday’s losses. Whilst many Asian stocks have been rallying for months on the prospect of further stimulus from central ...

Angus Campbell

Grexit fears mount

After a quiet start to the week where the dollar just paused for breath, the single currency is coming under renewed pressure this morning, in particular against the Yen as EURJPY has hit a near two year low overnight. Reports that Greece is preparing to default on its up and coming IMF loan repayments in May and June unless a deal is struck by the end of this month have done little to attract buyers of the euro and we’re unlikely to see any upside for some time given that QE has only just got ...

Angus Campbell

Sterling testing multi-year lows as Election looms

The economic calendar is very quiet today which gives us a chance to reflect on a week gone by that saw a recovery in dollar strength. It was sterling and the euro that were the main losers with sterling being a stand out as GBPUSD has overnight fallen to its lowest level since June 2010, a new low since the last General Election back in May 2010 and it is likely that with less than a month to go to the next General Election, sterling will remain under pressure against the dollar. Trading at ...

Simon Smith

Tighter ranges on majors

We are seeing daily ranges in major FX pairs move lower as the dollar continues in what can best be described as a corrective phase. The 10 day (simple) average range of EURUSD has moved to near the 6-month average of 1.1 cents (or 110 pips). It peaked over 2 cents in the wake of last month’s Fed announcement. USDJPY is much below the similar 6 months average of the 10 day range. This is largely a reflection of the change in FX drivers we’ve seen, with the many easings of policy that were being ...

Simon Smith

The more difficult path for FX

The Fed minutes last night revealed that “several” Fed members wanted to raise interest rates as early as June. Whether that view still holds in the wake of last week’s employment report is another matter, but the net effect was to give a modest bid to the dollar in the wake of the release. Interestingly, in looking at the factors that would make them “reasonably confident” that inflation would turn higher, a levelling of the exchange rate was one factor (together with further labour market ...

Simon Smith

Watching the Fed’s words

This evening sees the release of minutes to the 17-18 March FOMC meeting, where once again the Fed took with one hand (removing the word 'patient' from the statement) but gave in other ways (adjusting other wording, revising down future rate projections). The high point of the dollar index for the year was seen three days before the meeting, with the result securing the dollar turn-around. Given the change in wording, then the minutes could well offer further clues as to the Fed's thinking. For ...

Angus Campbell

Dollar bulls wait patiently for next leg higher

A long week end just gone will be followed by another for the celebrations of the orthodox Christian calendar which has particular significance for Greece as negotiations with Europe continue during another shortened business week. Last Friday saw just how volatile markets can be when major economic data is released on a bank holiday as we explained in our note ahead of the figure here. The nonfarm payroll was a disappointment for the dollar bulls who took quite a hit as the greenback was sold ...

Angus Campbell

Easter Nonfarm Payroll

The business week finishes today for many ahead of the extended Easter week end, however nonfarm payrolls are still to be released tomorrow. Yesterday’s ADP private payroll did little to boost the dollar as it came in less than expected and the euro continues to hold ground against most other currencies, with EURUSD recapturing the 1.0800 level trading at 1.0815. The Aussie however continues to struggle with AUDUSD now back below 0.7600 at 0.7585 at the time of writing with pressure coming from ...

Angus Campbell

Euro’s April Fool

Markets looks to be making an inauspicious start to the second quarter after a first quarter that ended on a risk averse note, certainly for equity markets and to some degree the Yen. The stand out from Q1 was the euro which suffered its worst quarter on record against the dollar for many reasons that we have been discussing throughout the course of 2015 so far. The decline will be widely welcomed by many parts of the Eurozone and in particular the ECB which had been working hard to try and ...

Angus Campbell

Dollar recovers, but euro holds ground

The dollar is just about regaining the upper hand and certainly in the case of the Aussie, AUDUSD has retraced all the way back from above 0.7900 just a week ago to 0.7630 at the time of writing, not all that far off testing a near six year low. Downward pressure on the Aussie is coming from growing concerns about China and commodity prices that remain depressed. This hasn’t put off risk appetite in many Asian equities which continue to test and push to new seven year highs, but iron ore and ...

Angus Campbell

Greece continues to disappoint EU

A shortened week but despite it being Good Friday this week with most markets closed for a long holiday week end (apart from FX which remain open), the US nonfarm payroll figures are still due to be released. Ahead of then pressure continues to grow on Greece to submit a meaningful plan for economic reform in order for the EU and IMF to release more funds to help the government with up and coming payments. Today was meant to see Greece’s proposals agreed and funds from the extension to the ...

Simon Smith

Re-writing the dollar rules

Yesterday was a strong indicator of the changing dynamic in FX markets, in that we saw the dollar weaker even when stocks were on the back-foot and political tensions in the Middle East were escalating. We moved away from the “risk-on/risk-off” world seen in the wake of the global financial crisis and the dollar was weaker despite these twin forces that in the past would have propelled the dollar higher. Since then, we’ve seen the dollar recover, with the dollar index bouncing off trend line ...

Simon Smith

More sustained dollar weakness

The dollar is on the defensive in the early part of the European session. This is most noticeable on USDJPY, which is now below the 118.50 level. The price action is not more indicative of a dollar correction after the volatility seen in the wake of the Fed decision, rather than a pause in the up-trend. This could well serve to increase FX volatility into the end of the month as longer-term players are forced to re-consider their positioning. Elsewhere, the dollar correction is also apparent ...

Simon Smith

Still deciding on the dollar

Yesterday was about the debate regarding the dollar; consolidation or correction. As always, it depends where you look, because at the moment it's a fairly mixed picture. Despite some goods efforts, EURUSD has not yet pushed about the 1.1043 high made on Wednesday last week. The dollar index has pushed below the low made last week, in part helped by the strength of the Swiss franc. On the other side, sterling struggled in the wake of the latest inflation data, which underlined that the UK is ...