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March 2016

Sterling hit by increased Brexit concerns

Published: Wednesday 23 March 2016

  • Sterling hit by increased Brexit concerns
  • USD stronger as 4th Fed member calls for rate hikes
The grotesqueness and insanity of violence against innocents has been witnessed once again in Europe. Death and mutilation in Brussels won't change anything in the global context; it just further polarises the views of all parties. Why can't these murderers see that?
 
Financial markets didn't really react to the news of the murder in Brussels except in the case of the Pound. Sterling had a poor day; losing ground against almost everything else as analysts started to consider that further terrorism in Europe would improve the chances of the 'Out' campaign in the EU referendum. Poor UK data also reignited fears over the UK's future outside the EU and the combined effect pulled Sterling to lower levels. The lack of UK data today means Sterling isn't likely to regain that strength in the next 24 hours.
 
Comments from Fed Governor Charles Evans strengthened the US Dollar. He expressed the view that the US economy could tolerate further interest rate hikes as he urged the rest of the Fed Open Market Committee to get on with raising rates. That makes 4 of the 17 strong committee who have publicly pressed for further rate hikes and we have to wonder if other harbour similar views. The US Dollar strengthened on his comments.
 
News that South African consumer inflation has pushed back up to 2009 levels strengthened the Rand this morning. 7.0% inflation makes sense of the South African Reserve Bank's recent interest rate hike but that won't fix the drought or sort out the energy markets, both of which are causing disruption in the SA economy.
 
This is indeed a quiet day on the data front but the overnight spell is likely to bring improved trade balance figures from New Zealand. If you are a NZD buyer, you may wish to protect yourself against the probability of NZD strength before tomorrow's open in the UK. Contact your Halo Financial Consultant for more information.
 
And finally, 18 year old Devin Washington attended an interview and got the job at a fast food restaurant. That wouldn't normally be news but during the interview, a man opportunistically reached over the counter, grabbed a wad of cash from the till and started to run for it. Devin noticed the assistant manager grappling with the man and, being a big guy, he grabbed the robber in a bear hug and held him until the police arrived. I think the words, "You're Hired" are entirely appropriate at that point.
 

Miracle?

 
A Monk was out one day fixing fences around the monastery but when he got back to his cell; his favourite Bible was not in his pocket where he left it. He was mortified because that Bible was given to him by his mother when he entered the monastery and he prayed for its safe return.
 
The next day, he was back out in the field when a goat wandered up to him carrying his Bible in its mouth. The Goat dropped the Bible at his feet and, to the Monk's astonishment, said "I believe this is yours. You dropped it on the hill over there."
 
The monk fell to his knees, raised his eyes to the heavens and exclaimed, "It’s a miracle!"
 
"Not really", said the Goat. "Your name was written inside the front cover."

 
Market BST Data/Event Previous Expected
USD 13:45 US: "Flash" Market US manufacturing PMI 51.3 51.5
USD 14:00 US: New home sales, k saar 494 520
EUR 15:00 E19: "Flash" consumer confidence, index -8.8 -8.3
NZD 21:45 New Zealand: Trade balance, NZD mn 8.1 90.0

FX Research by David Johnson

Daily Currency Analysis with William Busby


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