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April 2017

‘The global financial system is moving from fragility to resistance’ says Mark Carney

Published: Friday 07 April 2017

  • ‘The global financial system is moving from fragility to resistance’ says Mark Carney
  • The Dollar, Yen, Swiss Franc and gold jump as tension rises in Middle East
  • Market looks towards the Non-Farm Payroll later today
By Ricky Nelson
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In the UK, Mark Carney’s speech at 10:00 BST was billed as a top tier announcement, although what he was actually speaking about was not confirmed before the speech. Carney’s announcement was watched eagerly for any snippet of monetary policy speak, which can have a profound effect on the strength of Sterling. Carney discussed the security and responsibilities of the financial system in the UK and said that “the global financial system is moving from fragility to resistance” and highlighted the UK’s role as a key international financial centre.

However, he pointed out risks that need to be addressed globally, of not working together with other countries’ financial systems and the risks that poses to liquidity and funding; and the risks to the UK’s financial system, due to its complexity and size. He discussed the need for resilience and risk management in light of Brexit. Carney also emphasised the importance of Brexit globally by saying, "How the Brexit negotiations conclude will be a litmus test for responsible financial globalisation” and speaking positively about the UK’s strong position in the negotiations. He was keen to point out the opportunities for increased trade and globalisation that this presents.

The outcomes of this morning’s speech provided a boost for the Pound, which bodes well for this afternoon’s release of the National Institute of Economic and Social Research (NIESR) Gross Domestic Product (GDP) Estimate for the UK, with it expected at 0.6% - anything wide of the mark could result in volatility for the Pound, but this morning’s discussions may just have given Sterling the helping hand it needed.

Traders will be looking for safe havens this morning with tensions in the Middle East ratcheting up as the US bombed an airfield in Syria overnight. The airbase allegedly responsible for launching the chemical weapons attack earlier this week. The US administration have stated that there can be no future in Syria for Mr Assad and this will now complicate relationships between themselves and Russia. The Dollar, Yen, Swiss Franc and gold have gained on the news.

The main event today in the US today will be US non-farm payrolls at 13:30 BST and with the week’s precursor ADP figure overshooting the mark, positive things are expected for today. How much of this is already priced in is hard to tell.

Markets are expecting a rise of 180,000 and although as mentioned, the private report was better than expected. Building activity has picked up and the housing market has been largely buoyant, this could translate into a better than expected payroll report sparking further strength in the Dollar.


Spring Jokes


When do monkeys fall from the sky?
During Ape-ril showers!

Can February March?
No, but April May! 

What flowers grow on faces?
Tulips (Two-lips)! 

Why is everyone so tired on April 1?
Because they've just finished a long, 31 day March! 

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
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