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December 2015

Daily Currency Insight

Published: Friday 04 December 2015

 
  • ECB announcement yesterday dominates the spotlight
  • Euro strength across the board
  • US employment dominates today's markets

Thursday was all about the European Central Bank and their attempts to install growth into the European economy. Charging banks even more if they deposit funds with the ECB (a negative 0.3% rate) and injecting a further €360million into the Eurozone economy through Quantitative Easing measures doesn't appear to have allayed market fears. A dive in equity markets is perhaps not the reaction the ECB was after and, at a time when most central banks are trying to weaken their currencies, the ECB managed to strengthen the Euro by roughly 4 cents against the Pound and by  a similar amount against the US Dollar. The markets were clearly expecting something more substantial from the ECB. A bit of shock and awe might have had a more meaningful?
 
What heightened the volatility was a leaked report from the FT before the ECB announcement which suggested they would not change their base rate. That weakened the Euro considerably and then the actual announcement was split into two parts which caused its own volatility. A lot of money was made and lost yesterday and misinformation and poor information management were the twin causes.
 
Sterling was swept around on the wake of the Eurozone news but the UK service sector purchasing managers index; largely overlooked, was quite positive. I suspect the Pound will mount a recovery today as that news sinks in and the knee jerk reaction to the EU news starts to ebb.
 
Yesterday's US data was positive; factory orders returned to growth after two months of decline and traders are preparing for today's employment report. The rate of expansion in US payrolls is expected to have slowed a little but there are some who think the unemployment rate will fall to 4.9%. That would be a boost for the US Dollar.
 
It should not be forgotten that we will also get the Canadian unemployment data today. Most analysts think the data will show very little change in the unemployment level and no change in the rate itself.
 
And then it’s the weekend. Have a great one everyone. Only 20 sleeps until Christmas. Sorry to remind you.
 
Golfing incident
 
A guy arrives in the emergency room covered in bruises and limping whilst holding his crotch. He is clearly in a lot of pain.
 
"What happened to you?" says the nurse
 
"Well my wife and I were out playing golf. We were both playing really badly and both sliced the ball into a field next to the fairway. I climbed the fence and started to look for the balls. I searched for a while and then found one ball perched on the backside of a cow. The cow was lying down chewing the cud.  I looked at the marks on the ball and it was a Titleist Pro like my wife uses. The last thing I remember is pointing to the ball on the cows backside and saying, 'hey honey, this looks like yours'".