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December 2016

Euro weaker on Merkel’s prospects

Published: Tuesday 20 December 2016

  • Euro weaker on Merkel’s prospects
  • Reserve Bank of Australia weighing mixed data
  • USD strengthens as Trump is confirmed as next President

What yesterday lacked in market moving data it more than made up for in evil, atrocious violence. The assassination of the Russian ambassador to Turkey was overshadowed by the truck attack in Berlin which killed twelve people. My heart goes out to all the victims. Thankfully, most of us can’t understand what killing innocents does to further a radical cause. And long may that be a mystery to us.
The impact of Angela Merkel’s open door policy towards Middle Eastern migrants is being called into question and her tenure as German Chancellor is looking precarious. The Euro is on the back foot and parity with the US Dollar is a real possibility. The Sterling - Euro rate is once again eyeing the 1.20 level and, if the Pound can surmount the Euro buying interests at 1.2050, we could see this pair make significant gains in the tail end of 2016.
The US Dollar was buoyed by the removal of uncertainty regarding the US Electoral College. In spite of widespread protest, Donald Trump will now become the next president in January.  The USD will remain strong whilst other currencies suffer for a variety of reasons.
We got to see the minutes from the last Reserve Bank of Australia meeting overnight. They held their base rate on hold, as you probably remember, and their rationale was that weaker jobs data was being balanced against stronger housing data and other mixed figures. The Australian Dollar is a little weaker on the news.
Today lacks data but that means nothing in these volatile times. It is also worth remembering that a lot of traders will be absent from the markets at the end of the week and thinner trading conditions can cause more volatility.
The other story that caught my eye was in the Mirror - the newspaper and not the reflective kind. That never catches my eye. No, the Mirror has a report about a couple who bought two cocktails in the Widder Hotel in Zurich. Nothing odd about that other than the fact that the bill was CHF 1,040. That’s roughly £820 at today’s rate.  This is the correct price due to the exotic ingredients. I am guessing neither of the drinkers shouted ‘Down in one’. A drink that expensive needs to be sipped.


A man visiting the Grand Canyon falls over the edge. On his way down, he grabs a small shrub with one hand and saves himself from falling. Holding on for dear life, he cries out to anyone above for help.
A Loud Booming voice calls down. "DO YOU HAVE FAITH IN GOD?"
The man calls back to the voice from above, "Yes!"
A moment later, the voice from above speaks again, "Good, now let go!"
The man hanging from the shrub calls back up to the top of the precipice, "Is it blasphemous to ask for a second opinion?"


Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: Current Account  25.3b 28.3b
GBP 11:00 UK: Confederation of British Industry Realized Sales 26 35
CAD 13:30 Canada: Wholesales Sales -1.2% 0.3%
NZD 21:45 New Zealand: Trade Balance -846m -500m

Christmas and New Year Opening Hours

Monday 26th December - Closed Bank Holiday
Tuesday 27th December - Closed Bank Holiday
Wednesday 28th December  8:30 - 17:30
Thursday 29th December 8:30 - 17:30
Friday 30th December 8:30 - 17:30
Monday 2nd January - Closed Bank Holiday
Tuesday 3rd January 8:30 - 20:00
Wednesday 4th January 8:30 - 20:00
Normal Opening Hours Resume

Daily Currency Analysis by David Johnson
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