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September 2016

Quiet day today on data front

Published: Monday 19 September 2016

  • Quiet day today on data front 
  • Pound continues to lose ground
  • Markets await ECB and FED
It’s a quiet start to the week data wise as markets digest the news that a hard Brexit may cost the City of London its hub status. The head of the German central bank has stated that the UK will lose its passporting rights to be able to operate across the Eurozone unless it stays within the European Economic area. European Council leader Donald Tusk has said that Article 50 must be triggered early next year so that negotiations can begin in earnest. Poland, Hungary, Czech Republic and Slovakia have all said that Britain cannot have access to the single market and restrictions to free movement of people. With both sides unwilling to compromise, the stage looks set for long and tough negotiations.
Last week Sterling ended up on the back foot as the Bank of England suggested that there was a decent chance that interest rates could be cut again before the end of the year. Fundamental data has inferred that the anticipated slowdown as a result of the Brexit vote would not be as steep as expected and that the UK may avoid a recession. The BOE however still feel that there are risks ahead and that if November’s forecasts are broadly similar to August then most would expect interest rates to be lowered. The Pound has continued to lose ground and will struggle to maintain any rallies for the time being.
The focus this week will undoubtedly be in the United States as the Federal Reserve meet and make a decision on interest rates on Wednesday. Markets believe that there is only a 20% chance of a move so a surprise hike could see the Dollar strengthen significantly as volatility increases. Even if the Fed decides to leave rates on hold, the message will be that a rate hike is still on the table and attention will probably turn to the December meeting. For now any Dollar weakness should be an opportunity for buyers to jump in at better levels. Please contact your Halo Financial Consultant for more information.

One liners

Why don’t sheep shrink when they get wet?
I want to make a joke about sodium, but Na…
My first job was working in an orange juice factory, but I got canned: couldn’t concentrate.

Today's Major Economic Releases 

Market BST Data/Event Previous Expected
EUR 09:00 EU: Current account 29.5b 21.0b
USD 15:00 US: NAHB housing market index 60 60
AUD 15:30 Australia: CB leading index m/m 0.1% 0.1%

Latest FX news by Ricky Nelson

Daily Currency Analysis by Zeta Webber

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