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May 2017

Sterling holding up ahead of elections

Published: Wednesday 10 May 2017

  • Sterling holding at range tops
  • Draghi’s speech could strengthen EUR if rate hikes are hinted at
  • RBNZ expected on hold tonight
By David Johnson
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Comments from members of the US Federal Reserve suggesting any delay in US interest rate hikes would damage the economy, have strengthened the USD. The markets clearly perceive this kind of pressure will bring forward interest rate rises or just solidify Janet Yellen’s hints towards two hikes this year. The GBPUSD rate was less affected than the EURUSD rate but a quarter of a cent drop in that rate does keep it shy of the $1.30 level. That is definitely a psychological barrier for traders.
 
Sterling is also stuck below €1.20 but is staying close to that recent high. The Pound’s resilience in the face of an election and Brexit negotiations is impressive and the general mood of the market would suggest a push higher in the value of the Pound is just a matter of time. It is also a matter of there being no further shocks from the UK side. This evening’s release of UK housing data is unlikely to offer that shock. However, traders are more interested in tomorrow’s Bank of England action; of which there is plenty.
 
From the Euro’s side of things, this morning’s speech from ECB President Draghi will be closely watched for signs of change in the Central Bank’s monetary policy stance. We are all waiting for the ECB to start reducing bond holdings and increasing interest rates but the time is probably not right just yet. ‘When’, is the question on everyone’s lips.
 
Overnight we heard that Chinese inflation met the forecasts and that bodes well for China’s suppliers. Amongst those is New Zealand and NZ’s major export market is Australia; another of China’s suppliers. The Aussie and Kiwi Dollars consolidated overnight. The Reserve Bank of New Zealand will make an interest rate announcement tonight but no change is expected.
 
And I have a list of alerts set up to pick up on odd stories for this report. They fall into specific categories dependent on the news source. They highlight specific news services’ obsessions.
 
Daily Express – Ghosts and aliens
Daily Star – Anything gruesome. Especially animal attacks
Huffington Post – Internet and cyber stuff
Daily Mirror – Random but UK-centric
Metro – Hardly changes from one month to the next
Daily Mail – Anything with the word Kardashian in it        

 

In the deepest jungle

 
Three explorers run into a tribe of cannibals in the deepest darkest jungle. Oddly enough, whilst the tribe was cut off from the world, there had been missionaries there in the past, so the chief spoke good English. 
"Gentlemen, I am sorry but I must follow the way of my people."
"Oh?" says the Brit. "What's that?"
"Well..." the chief responds, "We will kill you, cook you, eat you, and use your skin to make a canoe. However we're not entirely uncivilized. We will let you choose the manner of your death, and perform it yourself, if you'd like."

The Frenchman steps forward first. "I would prefer a guillotine but a sharp sword to behead me would be acceptable."

The chief calls forward a massive warrior who draws his sword and beheads the Frenchman.
Next the Brit steps forward. "I'll have a pistol please and I’ll take my own life thank you."
The cannibals hand him a pistol. "God save the Queen!" shouts the Brit, and blows his brains out.
Finally the New Yorker steps forward. "Hey you. Buddy. Gimme a fork."
The cannibals are a bit mystified, but nonetheless give him a fork. He proceeds to stab himself all over with the fork. Arms, legs, face, torso. Anywhere he can stab himself with it, he does so.
The chief is aghast. "Good Lord! There’s blood everywhere. What are you doing!"
The New Yorker bellows, "Ain’t nobody making no canoe outta me buddy.”
 
 
For more information, infographics and the latest currency insights, visit www.halofinancial.com/news
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