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December 2016

Weekly Currency Insights from Halo Financial

Published: Friday 23 December 2016

  • US Dollar remains strong during lively week for US markets
  • Australian and New Zealand Dollars weaken
  • Euro struggles against its trading partners
  • Sterling falls in response to 2017 economic outlook concerns
This week, as is tradition, saw a flurry of economic data release activity in the run up to the Holidays, with GDP and Consumer Confidence figures flying out before the festive break. Markets are making the most of every day in the run up to festive public holidays, where the markets will be thinly traded and therefore open to volatility at the end of the year and beginning of 2017. Now is the time to take stock and plan ahead for any currency transactions for the end of December and early 2017, in order to avoid the risk of volatile currency markets in this tricky period.

Brexit’s back…alright?
We began the busy last week before the festive holidays with the Brexit debate kicking off once more across the UK and EU, as speculation about the cost of Brexit to other EU members once the UK is no longer making contributions to the Union flowed. Nobody really knows the figure, it seems, although the measures to balance it are likely to require cuts, higher contributions from other EU members, or both. Consumer Confidence figures in the UK were not as disappointing as the -8 index reading in November, however, the figures are still poor, and the report notes that, while consumers seem confident about personal finances, concerns about the implications of Brexit, a weak Pound and potentially higher inflation are likely to take their toll. This gloomy message caused Sterling to fall. The Euro began the week on the back foot amidst troubles in Germany, with the possibility of the Euro reaching parity with the US Dollar looking increasingly likely. The Euro is also suffering against its other major currency partner, Sterling. The Eurozone Consumer Confidence data did little to help the Single Currency.

Celebrate good times for the US Dollar
Across the Pond, US markets teetered at the start of the week off the back of US-China tensions, followed by a boost in the form of confirmation that Donald Trump will take the reins as US President in January 2017, which is likely to keep the US Dollar strong against other currencies given its safe haven status in volatile markets elsewhere. A raft of data came out from the US and Canada in the run up to the holiday season, including US Durable Goods Orders, US GDP Growth Data for the fourth quarter, the US House Price Index and Personal Income and Spending Data. The US figures were better than expected and the US Dollar has had a good week as a result. At the same time, Canada released its Inflation and Retail Sales data, which showed a healthy rise in retail activity, but a slightly lower inflation rate. That mixed result left the Canadian Dollar tracking its US counterpart. 
 
A Land Down Under on mute
The Reserve Bank of Australia released their Board Meeting Minutes, which weakened the Australian Dollar slightly, as the central bank kept their base rate at the same level, considering that weaker jobs data results were in turn balanced by the strong housing data, amongst other recent figures. Their fellow Antipodeans received the news that New Zealand Business Confidence is higher, despite concerns about credit markets. This was followed by economic growth data, which was expected to be much the same as the last 3.6% annualised figure and therefore boost the New Zealand Dollar, raising a warning flag for NZD buyers. Broad growth figures were released across all New Zealand’s business sectors, particularly manufacturing, but the figures showed a slowdown in the country’s all-important agricultural sector and the New Zealand Dollar remained weak.

Christmas Competition!
If you can name the artists of the three tracks loosely woven into this week’s Currency Insights, Tweet us at @HaloFinancial with the answers and be in with a chance of winning a £25 Amazon voucher to spend in the January Sales!

On a more serious note, do get in touch before the festivities if you are planning any currency transfers in the coming days and weeks, as markets are usually pretty eventful at this time of year.

We’d like to take this opportunity to wish you all the very best for the festive season and a very happy and prosperous New Year.
 
Christmas and New Year Opening Hours
Monday 26th December - Bank Holiday Closed
Tuesday 27th December - Bank Holiday Closed
Wednesday 28th December 08:30 - 17:30
Thursday 29th December 08:30 - 17:30
Friday 30th December 08:30 - 17:30
Monday 2nd January - Bank Holiday Closed
Tuesday 3rd January 08:30 - 20:00
Wednesday 4th January 08:30 - 20:00
Normal Opening Hours Resume

Weekly Currency Insight by David Johnson

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