B
BenjaminFX
New Member
Wednesday 30th March 2011
Hindsight is a wonderful thing
With the month drawing to a close, and other then leaving most thinking ‘where did March go’ it is time to reflect on the macro effect of recent black swan events.
GBP
Sterling has had a mixed bag of results against its major rival currencies, despite gaining some ground against safe havens such as the Yen and Swiss Franc, the issue of austerity measures have hindered growth when compared to the Euro and US Dollar.
What with the UK’s Monetary Policy Committee remaining stand-fast on the issue of raising interest rates to tackle the country’s spiralling inflation, currently at 4.4 percent which is more than twice the central banks target.
With the impending departure of Andrew Sentence, the biggest MPC member in support of raising the cost of borrow, could this signal that the UK will be third in the running when it comes to a rate hike.
Investors certainly seem to believe this as during the month of March Sterling fell 4 percent against the Euro and over 2.5 percent against the US Dollar.
The UK economy is clearly struggling as the world comes to terms with the cost of recent black swan events.
With the Royal wedding predicted to boast tourism and bring an expected £1 billion to the economy this cannot overshadow the estimate £6 billion cost to UK business in lost sales and staff costs.
During April traders will want to watch for positive economic data in lieu of a decision to raise interest rates.
EUR
Poised to be the first economic zone to raise interest rates, the 17 nation currency has performed well considering the recent collapse of the Portuguese government’s austerity plans, the spectacular ‘phoenix from the ashes’ actions of the country’s Prime Minister and the possibility of a €80 billion bail out package to be found for the Iberian Peninsular.
At the beginning of the month investors seemed to favour the Euro as a safe haven when hedging against US Dollar interests that had a tail risk from the unrest in the oil rich Arab states.
This sentiment has continued throughout the month following hawkish comments from the President of the European Central Bank, Jean Claude Trichet, who stated that the Euro zone would have to move on interest rates as early as April.
Currently seeing the high of the year the Euro’s growth could be capped, initially expected to see a surge of investment ahead of the ECB rate decision at the start of April. How long will is be before the downgrading of Portugal and Greece take effect?
USD
The world’s largest economy has suffered a knock on effect of the recent global woes, as investors moved from US Dollar investments at the beginning of the month.
Political unrest in the Middle East, the tsunami and the follow on risk of nuclear meltdown in Japan and the Federal Reserves plans to commit to a further purchase of $200 billion of Treasury bonds did, for the first weeks in March, cause the greenback to falter against it’s major rivals.
Falling to lows of $1.6384 against GBP and $1.3755 against EUR it was clear that fears over a shortage in oil supplied by Libya and the cost of aid to the Far East would hinder US Dollar growth.
High volatility was then seen as St. Louis Fed President, James Bullard spoke out about his intent to curtail austerity plans buy half, $100 billion, giving US Dollar a push to regain most of its losses against Sterling and ‘dig in’ against the Euro.
This opens Quantitative Easing debate that could see America’s central bank rethink it’s asset purchase plans and opt instead for a rise in the base level of borrowing.
Although Mr Bullard is not part of the decision making term at the Fed, his comments have opened the debate to the media and in turn the consumer power of the US people.
Going forward the US have, month on month, seen impressive Non Farm Payroll and Employment figures. Should this trend continue with today’s releases then another flurry could be seen against GBP, YEN, and possibly even the EUR.
And finally
In last night’s international friendly Andy Caroll’s first goal for the team was not enough to defeat Ghana’s National Team. The Three Lions dominated the first half with Ashley Young, who forced Richard Kingston into a fine save, then stroked the cross bar from five yards.
The English goal came two minutes before the break, when Andy Carroll smashed the ball into the back of the net and at half time the game looked to have settled in favour of Capellos side. However, Ghana posed more of a threat in the second half and Sunderland’s Striker Asamoach Gyan’s goal in the 90th minute gave Ghana a draw they fully deserved.
Foreign Exchange Rates Table
Currency Pairs Current Mid-Rates at 9.00am
GBP - EUR 1.1392
EUR - GPB 0.8778
GBP - USD 1.6036
EUR - USD 1.4076
GBP - AUD 1.5560
GBP - CAD 1.5597
GBP - NZD 2.1112
GBP - CHF 1.48
GBP - HKD 12.49
GBP - NOK 8.9755
GBP - SEK 10.17
GBP - ZAR 10.97
GBP - THB 48.62
GBP - AED 5.8995
GBP - MAD 12.8525
GBP - ILS 5.6382
GBP - TRY 2.4951
GBP - JPY 133.10
Hindsight is a wonderful thing
With the month drawing to a close, and other then leaving most thinking ‘where did March go’ it is time to reflect on the macro effect of recent black swan events.
GBP
Sterling has had a mixed bag of results against its major rival currencies, despite gaining some ground against safe havens such as the Yen and Swiss Franc, the issue of austerity measures have hindered growth when compared to the Euro and US Dollar.
What with the UK’s Monetary Policy Committee remaining stand-fast on the issue of raising interest rates to tackle the country’s spiralling inflation, currently at 4.4 percent which is more than twice the central banks target.
With the impending departure of Andrew Sentence, the biggest MPC member in support of raising the cost of borrow, could this signal that the UK will be third in the running when it comes to a rate hike.
Investors certainly seem to believe this as during the month of March Sterling fell 4 percent against the Euro and over 2.5 percent against the US Dollar.
The UK economy is clearly struggling as the world comes to terms with the cost of recent black swan events.
With the Royal wedding predicted to boast tourism and bring an expected £1 billion to the economy this cannot overshadow the estimate £6 billion cost to UK business in lost sales and staff costs.
During April traders will want to watch for positive economic data in lieu of a decision to raise interest rates.
EUR
Poised to be the first economic zone to raise interest rates, the 17 nation currency has performed well considering the recent collapse of the Portuguese government’s austerity plans, the spectacular ‘phoenix from the ashes’ actions of the country’s Prime Minister and the possibility of a €80 billion bail out package to be found for the Iberian Peninsular.
At the beginning of the month investors seemed to favour the Euro as a safe haven when hedging against US Dollar interests that had a tail risk from the unrest in the oil rich Arab states.
This sentiment has continued throughout the month following hawkish comments from the President of the European Central Bank, Jean Claude Trichet, who stated that the Euro zone would have to move on interest rates as early as April.
Currently seeing the high of the year the Euro’s growth could be capped, initially expected to see a surge of investment ahead of the ECB rate decision at the start of April. How long will is be before the downgrading of Portugal and Greece take effect?
USD
The world’s largest economy has suffered a knock on effect of the recent global woes, as investors moved from US Dollar investments at the beginning of the month.
Political unrest in the Middle East, the tsunami and the follow on risk of nuclear meltdown in Japan and the Federal Reserves plans to commit to a further purchase of $200 billion of Treasury bonds did, for the first weeks in March, cause the greenback to falter against it’s major rivals.
Falling to lows of $1.6384 against GBP and $1.3755 against EUR it was clear that fears over a shortage in oil supplied by Libya and the cost of aid to the Far East would hinder US Dollar growth.
High volatility was then seen as St. Louis Fed President, James Bullard spoke out about his intent to curtail austerity plans buy half, $100 billion, giving US Dollar a push to regain most of its losses against Sterling and ‘dig in’ against the Euro.
This opens Quantitative Easing debate that could see America’s central bank rethink it’s asset purchase plans and opt instead for a rise in the base level of borrowing.
Although Mr Bullard is not part of the decision making term at the Fed, his comments have opened the debate to the media and in turn the consumer power of the US people.
Going forward the US have, month on month, seen impressive Non Farm Payroll and Employment figures. Should this trend continue with today’s releases then another flurry could be seen against GBP, YEN, and possibly even the EUR.
And finally
In last night’s international friendly Andy Caroll’s first goal for the team was not enough to defeat Ghana’s National Team. The Three Lions dominated the first half with Ashley Young, who forced Richard Kingston into a fine save, then stroked the cross bar from five yards.
The English goal came two minutes before the break, when Andy Carroll smashed the ball into the back of the net and at half time the game looked to have settled in favour of Capellos side. However, Ghana posed more of a threat in the second half and Sunderland’s Striker Asamoach Gyan’s goal in the 90th minute gave Ghana a draw they fully deserved.
Foreign Exchange Rates Table
Currency Pairs Current Mid-Rates at 9.00am
GBP - EUR 1.1392
EUR - GPB 0.8778
GBP - USD 1.6036
EUR - USD 1.4076
GBP - AUD 1.5560
GBP - CAD 1.5597
GBP - NZD 2.1112
GBP - CHF 1.48
GBP - HKD 12.49
GBP - NOK 8.9755
GBP - SEK 10.17
GBP - ZAR 10.97
GBP - THB 48.62
GBP - AED 5.8995
GBP - MAD 12.8525
GBP - ILS 5.6382
GBP - TRY 2.4951
GBP - JPY 133.10
