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February 2016

Daily Currency Insight

Published: Friday 19 February 2016

  • Euro weaker on ECB dovishness
  • UK data should strengthen Pound

David Cameron is doing his annoying neighbour impression in Europe and we are getting all sorts of 'it's tough but we'll get there' kinds of press releases. Whether the deal Mr Cameron comes away with is enough to convince British people that the EU is the place for them is an open debate but it is quite entertaining to see the spin doctors at work on this. Everyone wants to claim a victory and I am sure they all will.
 
Meanwhile, The European Central Bank is hinting heavily that further monetary stimulus is on its way. A similar hint a few years ago would have caused a Euro slump but it would seem that Euro traders are relatively sanguine because the Euro hasn't weakened that much. Sterling – Euro is up to €1.29 again and the Euro – US Dollar rate is down to $1.11 but these are both levels within the current trading ranges.
 
As far as the Pound is concerned, we have UK retail sales data this morning which should show an improvement on the December figures which were disappointing to say the least. We will also get UK government borrowing data which is expected to show improvement as employment hits a record high and tax receipts follow. January is also the last payment date for self-assessment tax; hence the influx of moolah for the treasury.
 
This afternoon brings US inflation data. It's minimal and will remain so unless commodity prices pick up, demand picks up and energy costs rise. The US Dollar is more heavily influenced by the prospects for an extended period without interest rate movement and the hints of a reversal of the December rate hike.
 
This afternoon also brings Canadian retail sales data. The data has been very mixed of late but a marginal improvement is forecast. The Canadian Dollar has had a volatile week; C$2.005 at the top and C$1.95 at the bottom. If this data is good, we can expect another dip to the lower end of that range.
 
And I mentioned spin doctors earlier; well see if you think this may be a similar case. Islamic Exorcists, Mallam Luthfi Jamal-Baba and Mallam Mohammad, based in Ghana, have stated that beautiful women who soak up the sun in their bikinis are much more likely to be possessed by evil demons. Well I don't know about you but I think this needs looking into in more depth and I am willing to risk assault by evil demons and mortal danger and I volunteer for the task of watching beautiful women in bikinis to see if they get possessed. What do you mean, 'join the queue?'
 

The talk

 
Peter joins a new rugby club and, after his first game as a starting player, he is told that the club has an initiation tradition. During the team meal that evening, Peter will have to give a talk to the whole club and the subject of the discussion is 'Making love'.
 
The chap is a bit shocked. He is married and has some experience but is really not sure what to say. Nonetheless, he stands up after the main course when prompted by the club captain and gives a 20 minute presentation on the subject. It goes down very well and he gets a cheer and a round of applause at the end.
 
He arrives home very late and quite drunk but the next morning; his wife, Brenda asks how it went. He is still a bit blurry from the beer and the late night and before he thinks it through, be blurts out that he had to make a speech and of course she asks "about what?"
 
Not wanting to lie to her but a bit embarrassed to tell her the whole truth he says the first thing that comes into his head. "I spoke about...erm.... sailing."
 
So, whilst Brenda never knew he had a clue about sailing, she nods and gets on with her day. During the afternoon, she bumps into the wife of one of the other players. Alice says, "Ooh I hear your Peter's talk was a bit good last night."
 
"Oh was it?" said Brenda.
 
"Oh yes, Sounds like he is really... experienced," says Alice with a very naughty gleam in her eye.
 
 
"Yes I was surprised he would talk about that," says Brenda. "He's only done it twice. The first time he was sick and the second time his hat blew off."
 
FX Research by David Johnson

Daily Currency Analysis with William Busby

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