- CAD weakest in 11 years against USD
- Sterling slides on disappointing government borrowing
- NZD stronger on trade deficit news
Disappointing British public finance figures will worry the Chancellor of the Exchequer but probably not as much as it bothered traders in the forex markets. The Pound took another tumble yesterday after the data showed little improvement in the amount the government has to borrow in comparison with the previous year. The Pound has shed 9 cents against the Euro in the last 5 weeks and 4 cents against the US Dollar in the last 10 days. I would guess though, that as long as this morning's release of the final GDP calculation for Q3 is in line with expectations then perhaps we see an even better result than the previous estimate. Sterling will recover some of its losses through profit taking ahead of the Christmas break. The counterpoint to that is that any downward revision to that data would duff the Pound up. Sorry to use a technical term but I am sure you know what I mean. The volatility within the GBPEUR rate through 2015 has been impressive but this pair has been in an upward trend since early 2013 and it is still in that pattern unless the Pound falls below €1.33. If that breaks, then €1.27 is the next target.
Overnight last night we had the New Zealand Trade Balance data. The reported NZ$779 million deficit was slightly smaller than the markets had predicted and the NZ Dollar strengthened by roughly 2 cents against the Pound on the news. There seems every likelihood that the GBP-NZD rate will fall to the bottom of its trading channel and hit NZ$2.13 at some stage soon.
It has been interesting to see the positive response that the markets have displayed towards the Euro since the ECB loosened the money supply and increased the cost to banks of keeping funds on deposit. Whether this enthusiasm will be borne out by real economic gains is a moot point at this stage; it's too early to know. However, the dearth of Eurozone news this week will leave the Euro vulnerable to profit taking as traders square their speculative positions ahead of the long weekend ahead.
US Dollar strength is kind of inevitable after the Federal Reserve interest rate hike but it has been enhanced by the lowest oil price in decades and by reasonably solid US data. However, this afternoon's US durable goods orders and personal income and expenditure data is expected to be a tad downbeat, so traders are likely to take stock of their unbridled enthusiasm and may well sell some of their USD purchases to take the profit off to the boxing day sales. Be wary of a correction in this USD strength.
This afternoon brings Canadian economic growth data for the year to October. It will have been hit by the drop in commodity prices but we will see just how much that has impacted the domestic economy. The Canadian Dollar is the weakest it has been against the Pound since 2007 although it did briefly test this level in August. On the other hand, against the US Dollar, the Canadian dollar is at it's weakest it has been since 2004 and that is a great opportunity for anyone moving funds north across the border.
And 'tis the season to be jolly unless you are in Tajikistan. Bah Humbug is the order of the day in this ex-soviet, predominantly Muslim, country. Christmas celebrations are being pared back to a bare minimum by law. The education secretary has banned Christmas trees from schools along with gift giving and charitable fund raising. I know the Christmas thing isn't going to be everyone's cup of tea but banning fund raising and banning people from exchanging gifts is just mean spirited.
15 things we have learned from the movies
- It is always possible to park right outside any address at any time of day.
- A detective can only solve a case once he has been suspended from duty.
- Hacking government and crime syndicate computers is simple as long as you have a nerdy sidekick and a laptop.
- Don't worry if you are outnumbered in a fight. Each of your assailants will wait patiently while you deal with his colleague and then move in.
- In car chases, all cars, lorries, busses, mobile cranes and motorcycles travel at roughly the same top speed and yet catching up to the car you are chasing is easily achieved even when they have a head start.
- No one involved in a car crash, alien invasion, major fight, zombie attack or lengthy fall will ever go into shock.
- People who fall in love generally hate each other when they first meet.
- Aliens will all be roughly human in size and limb count.
- If the world is in peril, the President of the United States will be considered the leader of choice.
- In America, everyone, no matter what they do for a living, owns a beach front house or a cool apartment.
- Only bad guys die from one bullet.
- All Police Sergeants have high blood pressure and shout a lot .
- If you start singing and dancing in the street, no one will think you are weird and everyone will know all the words and dance moves.
- All master criminals are either British or German.
- Everyone in Asia is a martial arts expert and is tied into a Yakuza group in some way.
Christmas opening hours
With Christmas fast approaching, it's worth planning your currency needs to ensure you don't face delays during the festivities.
The Halo Financial opening hours are (All GMT)
21st, 22nd, 23rd December – 08:30 to 20:00 (Normal Hours)
24th Christmas Eve – 08:30 to 16:00
29th, 30th 31st December – 08:30 to 17:30
4th January 2016 – 08:30 to 20:00 (Normal hours resume)
Over the Christmas period with the majority of traders and market participants away there’s much thinner trading volumes which can mean increased volatility and we always recommend placing limit orders over the next 2 weeks to take advantage of any favourable moves in the exchange rate. Your Halo FX consultant will be happy to suggest levels if you’re keen.
FX Research by David Johnson