The pound continued its downwards run on the US Dollar in this week’s forex trading, largely thanks to the release of mediocre Construction PMIs for December 2016. The PMIs measure activity and investment in the sector and are a key indicator of future economic growth.
The news comes as markets nervously await the triggering of Article 50, the device that formally begins Britain’s exit from the European Union. The risk of a second Scottish independence referendum is further devaluing Sterling, with Scottish First Minister Nicola Sturgeon appearing increasingly committed to separation from the UK.
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On 21 January, Donald Trump was inaugurated as the president of the US. Though Trump has been lauded as the most ‘business focused’ president, this has not hitherto materialised in definite fiscal policies. As such, there has been a climate of uncertainty amongst Forex traders and this has materialised in a sense, since January 21st, that the dollar may be at risk.
Why might the dollar be at risk?
The uncertainty about the Trump administration’s fiscal policy has led some traders to worry that this could destabilise the dollar. Often all that it takes is a lack of confidence in the dollar for it to start to fall as traders turn to other markets and currencies as securer forms of investment.
Read the rest of The Uncertainty Of US Fiscal Trading Policy And Its Effect On Forex Trading »
Sterling slipped to a five-week low against the euro on Monday (September 26), as lingering worries over the economic impact of Britain’s impending exit from the European Union weighed on the currency.
The pound also traded close to a five-week low against the dollar at $1.2985, leaving it less than two cents away from the three-decade low below $1.28 it plumbed in the wake of June’s Brexit vote.
After hitting that low in July, sterling gained 5 percent versus the dollar by early September, as data showed the post-referendum economy holding up better than had been feared. But with parliament back from its summer recess, Brexit worries have come back into investors’ radar and have dampened appetite for the currency.
Read the rest of Brexit Worries Drive Sterling to a Six-week Low Against the Euro »
Sterling steadied on Monday (September 12) after its first week of losses in four, with traders debating whether the currency had topped out for the moment as they awaited a speech by U.S. Federal Reserve board member Lael Brainard.
The pound dipped last week against the dollar and euro but has broadly done well in the past month as a handful of economic indicators suggested the UK economy was holding up better than expected after June’s vote to leave the European Union.
It was up roughly 0.3 percent at $1.3304 and 84.37 pence per euro by 3.30pm on Monday (September 12).
Read the rest of Sterling Inches Higher as All Eyes are on Fed’s Brainard »
South Africa’s biggest private fixed-income money manager will stop lending money to six of the country’s largest state companies because it is concerned about how they are being run, government infighting and threats to the independence of the finance ministry.
Futuregrowth Asset Management, which has about 170 billion rand ($11.7 billion) in assets, shelved plans to lend more than 1.8 billion rand to three state companies on Tuesday (August 30), Chief Investment Officer Andrew Canter said from Cape Town on Wednesday (August 31), without giving more detail.
The fund manager will only resume offering loans and rolling over existing debt once it has determined that what it sees as proper oversight and governance at the companies have been restored.
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Sterling traded close to a three-week high against the dollar on Thursday (August 25) and was on track for its best week in six, with worries over the economic impact of Britain’s vote to leave the European Union easing a little after recent better-than-expected data.
The pound was also on track for its best week in six weeks against the euro, having hit a two-week high against the single currency on Wednesday (August 24).
Short positions on sterling had reached a record high of 94,238 contracts in the week to August 16, and traders said many speculators had this week been unwinding bets and booking profits, which had helped lift the currency.
Read the rest of Sterling Near a Three-week High as Brexit Worries Ease »
The yen strengthened beyond 100 per dollar for a second time this week as the U.S. currency’s bid to break out from a three-month low stalled after Federal Reserve minutes indicated officials were divided over the urgency to raise interest rates.
A gauge of the dollar has fallen more than 5 per cent this year as investors bet the Fed will raise interest rates at most once this year, compared with policy makers’ forecasts at the start of 2016 for four increases.
That means the U.S. central bank is less likely to diverge from the Bank of Japan and European Central Bank, which are boosting stimulus to spur flagging growth.
Read the rest of Yen Advances past 100 Against the Dollar for Second Time this Week »
New Zealand’s dollar surged to the highest since May 2015 after traders deemed the central bank’s decision to cut borrowing costs was insufficiently dovish amid the global ardour for yield spurred by unprecedented global monetary easing.
The kiwi climbed against all of its 16 major counterparts after the Reserve Bank of New Zealand cut its official rate to a record, aping the reaction of its Australian counterpart when officials there lowered borrowing costs earlier this month.
Some investors had been looking for a more aggressive easing signal from the central bank, which indicated it would cut rates at least once more to boost weak inflation. The US dollar advanced against the euro after last week’s better-than-expected jobs data bolstered a view that the Federal Reserve is among few central banks in developed economies whose next policy move will be to tighten.
Read the rest of Kiwi Soars to One-Year High as it Ignores Central Bank Cuts »
Speculators that are the most bearish on sterling in nearly 25 years may be vindicated by a report published on Monday (August 1) showing Brexit is probably hitting Britain harder than markets previously envisaged.
Sterling declined versus most of its 16 major peers as the data showed UK manufacturing shrank more than initially forecast in July.
Hedge funds and other large speculators ran the biggest net short positions, or bets on the currency’s decline, since records began amid speculation that the Bank of England will cut interest rates for the first time in more than seven years on Thursday, August 4 to head off the risk of recession.
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The yen rose more than 1 per cent against the dollar and the euro on Tuesday (July 26), as traders dialled back expectations of how much new stimulus Japanese authorities will inject into an ailing economy.
The Bank of Japan is expected to announce expanded asset purchases and a rate cut further into negative territory at the end of its policy meeting on Friday (July 29).
Meanwhile the government is compiling a spending package that some sources have estimated could be worth up to 20 trillion yen. But a Nikkei report on Tuesday (July 26) said direct fiscal stimulus into the economy would amount to about 6 trillion yen over the next few years.
Read the rest of Yen Gains as Japanese Stimulus Expectations are Dialled Back »
The pound fell even as a report showed the UK’s annual inflation rate rose more in June than economists forecast.
Sterling weakened versus most of its 16 major peers. UK consumer prices climbed 0.5 per cent last month from a year earlier, the Office for National Statistics said in London. Analysts had expected the rate to rise to 0.4 per cent, from 0.3 per cent in May, according to the median estimate in a survey by news agency Bloomberg. The Bank of England’s 2 per cent inflation target was last reached in December 2013.
The Bank of England signalled last week it is readying stimulus for August as the economy reels from Britain’s decision to quit the European Union. Minutes of the BOE’s July meeting showed most members of the Monetary Policy Committee expect policy to be loosened next month.
Read the rest of Pound Falls Even as Inflation Rates Beat Economists’ Forecasts »
Sterling was firmer on Wednesday (July 13), trading near a two-week high against the euro as Theresa May was set to take over as Britain’s prime minister, easing some of the political uncertainty that has dogged the currency in the past few weeks.
Traders will keep an eye on who will be appointed as finance minister with many awaiting for clarity on the new prime minister’s detailed thinking on triggering Article 50, the procedure for exiting the European Union.
May has said “Brexit means Brexit”, but added Britain will not rush to trigger the formal divorce proceedings. The uncertainty over whether Britain will be able to retain access to the single market after exiting the EU, along with expectations that the Bank of England could cut rates on Thursday (July 14), are likely to make traders wary of sterling.
Read the rest of Firm Sterling Ahead of New Prime Minister’s Brexit View »
The pound tumbled to a new 31-year low on Wednesday (July 6), at one point dipping below $1.28, on fears over the effect of last month’s Brexit vote on Britain’s property market and the prospect of cuts in Bank of England interest rates.
The pound, one of the main vehicles through which financial markets can express concern about Britain’s decision to leave the European Union, fell as low as $1.2798 in Asian trading, its lowest since June 1985. It recovered to about $1.2891 in afternoon trading in London.
That still left it more than 13 per cent weaker than it was before the June 23 referendum, and about 1 per cent lower on the day.
Read the rest of Brexit Woes Drags Pound To 31-year Low »
Scandinavia’s biggest bank estimates Denmark sold almost $750 million in kroner to weaken the currency after it became clear early on Friday (June 24) that Britons had voted to leave the European Union.
The flight into safe-haven markets triggered by Brexit drove the krone to its strongest level against the euro in more than a decade, forcing the central bank to intervene to defend its currency peg.
The bank probably sold about 5 billion kroner ($744 million) on Friday (June 24), according to Jan Stoerup Nielsen, a senior analyst at Nordea in Copenhagen. That follows a resumption of interventions to weaken the krone in May for the first time since February last year, when Denmark’s euro peg was under a speculative attack. Interventions in May reached 23.6 billion kroner.
Read the rest of Denmark Dumped $750 million in Kroner Hours after Brexit »
Prime Minister David Cameron has said Thursday’s (June 23) referendum on Britain’s membership of the European Union was likely to be very close but he also predicted a “remain dividend” in investments if Britons voted to stay in the 28-nation bloc.
With just two days to go until the referendum that will shape the future of Europe, opinion polls have indicated that British public opinion is so divided that the outcome is too close to call.
Meanwhile, Swiss investment bank UBS warned its clients on Tuesday (June 21) it may fail to execute some orders on its electronic trading platform should this week’s Brexit referendum affect liquidity or cause extreme volatility.
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With the Brexit vote taking place in less than 48 hours, many Forex online traders (Foreign Exchange Market) are sweating at their palms. Numerous, who are trading, had said that the markets were looking incredibly risky. Investors have been closely been following the vote. The vote will take place on Thursday. According to recent polls, the vote is set to be substantially close.
Read the rest of Markets soaring just 48 hours to Brexit vote »
With sterling trades seen too expensive, the yen and Swiss franc are in demand according to in-depth research by news agency Bloomberg.
The UK’s referendum on European Union membership is spurring volatility in the pound, making trading sterling increasingly expensive. Banks are pointing clients toward alternative currency bets or hedges that could fare well regardless of the outcome.
Here is a list of analysts’ favourite trades as written in research notes or recommended in interviews conducted by Bloomberg News in recent days.
Read the rest of Banks’ Favourite Trades Ahead of UK Brexit Vote on June 23 »
During the summer, most forex traders are busy with relaxing in the sun or out and about on various holidays. Now, thanks to new technology and mobile phones, that does not have to mean that you can’t trade as usual.
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Australia’s dollar rose to a one-month high and bond yields rebounded from the lowest ever as the central bank refrained from cutting interest rates.
The Reserve Bank of Australia left the benchmark rate at a record-low 1.75 percent, as forecast by all but one economist surveyed by news agency Bloomberg. Most expect the central bank to resume easing in August after a quarter-point reduction in May in response to a record-low core inflation reading.
“Last night’s RBA policy statement was judged as lacking an explicit easing bias,” said Jane Foley, a senior currency strategist at Rabobank International in London. “While this assessment has lent the Australian dollar significant support this morning, there are sufficient negative nuances contained within the RBA’s policy outlook to infer that the prospect of an August rate cut remain very strong.”
Read the rest of Australian Dollar Rises to One-Month High as RBA Refrains From Cutting Rates »
The Colombian peso weakened on Tuesday (31/5) after the country’s central bank announced it would suspend an intervention policy aimed at slowing the currency’s decline.
The central bank said on Friday (27/5) it would not hold any additional dollar option sales, but did not fully rule out further intervention.
The bank also increased its benchmark interest rate for a ninth consecutive month on Friday, to 7.25 per cent, confirming the expectations of most analysts in a Reuters poll.
Read the rest of Emerging Markets: Colombian Peso Weakens After Cenbank Backs Off Intervention »