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February 2016

Daily Currency Insight

Published: Monday 01 February 2016

  • Sterling awaits BOE barrage
  • Chinese manufacturing continues to slow
  • Oil price slump is causing pain for producers
     
The start of this year seems to have been plagued by falling icons. Bowie, Rickman and now Wogan; all were celebrated enough to be recognised by just their surnames and all will be sorely missed.
 
The collapse in oil prices is really starting to hurt the producing nations. Venezuela is trying to convince its fellow oil producers to cut production to try to stabilise the oil price but so far that has fallen on deaf ears within Saudi Arabia. However, other producers have also been seen selling assets in order to balance the budget, so this $30 a barrel level is not sustainable in the long term. Demand is also on the slide and a sixth straight decline in Chinese manufacturing activity, as reported this morning, won't help that.
 
The effects of the slower growth being seen in China and the impact that has on those who export to China are manifesting themselves in hints from the US Federal Reserve that interest rates will rise more slowly than had been expected. The US Dollar continues to strengthen after a round of positive corporate reports on Friday boosted the US equities markets but the USD is looking increasingly overbought, so there is scope for a correction. Stand by if you are a USD buyer. Friday's employment report is perhaps the catalyst for any change; the forecasters are divided on whether we will see improved or deteriorating data.
 
The British Pound has a very busy week ahead. Whilst it is unlikely the Bank of England will make any policy changes on Thursday, the minutes of their meeting will be interesting and they will also publish their inflation report on the same day.  This week also brings a number of Purchasing Managers Indices; not just from the UK, but that will shed some light on how well UK Plc is faring with slowing growth rates in Britain's overseas markets. Sterling has been hammered of late but appears to be finding some buying interest so beware of the rebound which could catch GBP buyers out.
 
The Euro has a similarly busy week; PMI indices, employment and retail sales data will keep things lively. The Euro is still, in my humble opinion, too strong for its own data and I wouldn't be at all surprised to see some element of weakening in the value of the Euro as this week progresses. The ECB publishes its economic bulletin on Thursday and, judging by recent ECB rhetoric; things aren't all rosy in Frankfurt.
 
And the expression, 'getting your comeuppance' has almost lost it place in the internet. 'Payback' is the other term and 'instant karma' probably does the same but Donald "Chip" Pugh knows what they all mean. He saw a press release where Police were asking for his whereabouts because he failed to appear in court and was wanted. He thought he was being so clever by sending the Police a selfie because he thought the mugshot they used wasn't flattering enough. Well his selfie helped the Police catch him and he is now behind bars. Ooops.
 

Perfect

 
A 90 year old lifelong bachelor was asked why he never married.
"Well I guess I just never found the right woman," he replied.
"Seriously?" says the friend. "Surely in the last 75 years or so you must have met one woman who you wanted to marry."
"Well I did meet one girl when I was in my late twenties. She was beautiful, kind, funny, intelligent and attentive. Yup, she was the perfect girl for me."
"So why didn't you marry her then," came the reply.
"Unfortunately it turned out she was looking for the perfect man."

 
FX Research by David Johnson
Daily Currency Analysis with Michael Hart
 
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