Daily Archives: May 29, 2012
Will the US economy come to the World’s rescue? Important US & UK Data this and next week. Have you made provisions for the UK Bank holiday movements?
The US economy is the largest in the world and it is said that ‘When the US sneezes, the world catches a cold’, which is also true of periods when the US is faring well. Which it looks to be at present with growth figures European countries can only dream of and a falling Unemployment rate. My key releases this week would be Thursday’s US GDP data and Friday’s US Unemployment data. The US dollar is the most heavily transacted currency globally and it is fair to say USD movements affect just about every other currency around.
Focus of course remains on Greece and Europe (particularly Spain) but I doubt we will see too much movement until the Greek elections next month. The Eurozone crisis is clearly posing a massive risk to the global economy which is why the US data out this Friday is key to highlighting to what extent America can ‘pick up the tab’ on the global economy, compensating for the shortcomings of Europe.
Anyone considering any currency transactions should therefore be well aware of data at the end of this week. The US dollar one way or another effects almost every other currency out there so Thursday’s GDP and Friday’s Non-Farm and Unemployment data are well worth being aware of whatever your particular interests. Investors have recently been overlooking the fact US interest rates will be on hold for at least 2 ½ years, instead taking a view to utilise safe haven positions on the Greenback. There is some room to see the dollar strengthen further against the Euro and the pound due to this, but if considering either of these trades I would be tempted to take advantage of recent movements, (perhaps utilising a Stop), particularly EURUSD, now at a 22 month low.
The cost of the recent US domestic economic improvements is trillions in Quantitative Easing, ballooning debts and interest rates at an exceptionally low 0.25%, with no sign of change until late 2014. Should data disappoint this week funds could move either in or out of the USD as risk sentiments shift. Whatever your particular currency interests this is well worth being aware of, particularly ahead of a 4 day break for FCD plc and UK based clients.
Pound Sterling News and Upcoming Data
I still feel the pound is very precariously balanced at the moment and indeed some of the better rates for selling the pound have since fallen from the close to 3 year highs we had for sterling on a trade weighted basis. Friday 1st June we have UK PMI for Manufacturing which is predicted to show a small contraction in recent manufacturing activity thereby underlining the general slump in the state of the UK economy. As soon as we are back next Wednesday 6th and Thursday 7th we have the Construction and Services PMI data too which could create some movement on sterling. Is it time for the state of the economy in the UK to be more accurately reflected on rates? Thursday too we have the UK Interest Rate Decision which nearly always throws up some opportunities with up to half cent spikes one way or the other ahead of and post the decision.
UK BANK HOLIDAYS
The 4th and 5th of June are UK Bank holidays and as such need to be aware of if considering any currency exchanges. Not only will this put extra duration on transfer windows for Invoice payments, property completions etc, it is also a time in
which we could see movement on the markets for those perched ready to trade at the right level. It is unusual to see any major movements when financial markets are closed but with the political nature of the Eurozone crisis now clear, it is possible we could see out of hour’s statements and is worth considering. Don’t forget our contract options below, all of which I will be happy to discuss how we can tailor to suit you.
Spot - We trade on the ‘spot’. Settlement is due within a few working days and the money can be sent immediately.
Forward - We book todays rates forward for up to two years. A small deposit is required. This guarantees your rate for the duration and means you do not get caught out if the market moves against you. Very popular for property and commercial transactions.
Limit – You choose a higher level you would like to trade at and we enter an automatic order which we trade at once achieved. Guarantees you get your desired rate.
Stop – The same as a Limit but you choose a lower level you would not like to get worse than. Can be used in conjunction with a Limit and you can move them around or cancel them as long as they have not filled.
As always if you are actually planning anything in the coming weeks or months why not make us aware so we can provide a more detailed forecast and keep you informed of important events surrounding your trade. If you have any questions over the service, the content of these posts (there is no such thing as a stupid question!) or how it all works then
please let me know.
Jonathan Watson email@example.com
00 44 1494 787 478