Greece Making The Headlines Again
German Chancellor Angela Merkel met yesterday evening with Greek Prime Minister Alexis Tsipras to discuss the Greek Debt. It is clear that even though extension to certain bailout payments have been granted, Greece is still struggling financially and is pulling out even the most drastic measures to change that. There are on-going reports that With the Greek Bailout situation potentially back in the limelight, Euro buyers should ensure that they are watching their position.
GBP Exchange Rate Forecast
UK Factory Orders yesterday showed a reduction to the lowest figure for 24 months, confirming fears that exports are starting to struggle. The main factor for the reduced figures is the strong pound over the weak Euro, meaning Eurozone partners are being priced out of the market. Factory output is currently reported as being at 2008 levels – a serious cause for concern. We have seen in the past the BOE (Bank of England) act swiftly to boost export opportunities by ‘talking down’ the value of Sterling. I therefore wouldn’t be surprised to see Mark Carney (BOE Governor) make this move sooner rather than later to bring the Pound down – potentially in his address on Friday at 08:45. UK ‘Consumer Price Index’ (Inflation) figures are released at 09:30 today and again a slight reduction is expected. Inflation is moving further and further from the target of 2.0%. I wouldn’t be surprised to see the Pound weaken due to the impact of lower Oil prices, so ensure that you are ready to act swiftly if you haven’t already!
The overwhelming point to consider for anyone holding Sterling is that we are about to enter potentially the most volatile trading period for 5 years. The UK General Election is wide open with an outcome incredibly hard to predict. A hung parliament is a distinct possibility – the last hung-parliament carried huge losses for the Pound. Parliament is set to break for ‘recess’ on Monday 30th March, so expect the Politicians to then hit the campaign trail with vengeance!
Australian Dollars at Record Short Term Lows
The Aussie has seen a huge backing following the US Dollar weakening this weekend. As the old saying goes, ‘When the US sneezes, the World catches a cold’, very definitely the case here. US Dollar investors will buy Australian Dollar bonds as the potential returns are greater, meaning the influx of funds strengthens the currency. However, the Reserve Bank of Australia have stated on several occasions that they will act to avoid the currency becoming overvalued, generally by cutting Interest Rates. Therefore, if you are selling AUD I’d do so sooner father than later. If you’re buying, get in contact to make sure that you are ready to take advantage of a spike…
USD Forecast – What to Expect for the Rest of the Week
Following last week’s bold move in to the mid-1.40s, Dollar buyers have had a slight improvement. Janet Yellen (Chair of the US Federal Reserve) stated that, ‘Policy makers aren’t rushing to raise Interest rates’. This has subsequently seen the Dollar lose the gains made, and puts a big focus on to data releases this week. This afternoon the US releases Inflation data (12:30) and tomorrow afternoon Durable goods figures (also 12:30). The week is capped off on Friday afternoon with the US Gross Domestic Product figure so all in all still a very busy week for the Greenback.
New Zealand Dollar – When will we see 2.0 again?
The New Zealand Dollar has seen a huge improvement over the last 30 day (as noted in the above table), gaining back roughly 10 Cents against the Pound. The Reserve Bank of New Zealand announced on 12th March that Interest rates were not going to be cut on this occasion, and more recently a primary Kiwi Bank (NAB) have been very ‘bullish’ in their Exchange Rate forecast. NAB has indicated that due to good returns harvested from investing in NZD, the NZ Dollar should have a period of strength. However, this should be seen as a window, rather than the norm. Reserve Bank of New Zealand Governor Graeme Wheeler has the power to halt a rampant Kiwi Dollar by cutting Interest Rates so I don’t think it will be too long until a return north of the 2.0 mark is seen. If you are Selling Kiwi it may be worth making a move…
Please feel free to contact me direct to the trading floor on 01494 787 478 – please quote this blog and ask for me – Andrew Bromley. Alternatively, email me on AJB@currencies.co.uk