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Volatility likely over long weekend break

Published: Thursday 29 March 2018

  • Sterling slips a little on mixed data and Brexit support
  • US economic growth revised upward
  • Volatility likely over long weekend break
​​By David Johnson

Last Day...

For most businesses, this is the last working day of the month and the Quarter and for many it will be the final month of their financial year. That could make this one of the most volatile days of the year so far but I suspect it won’t be.  It is also exactly one year to the Brexit date but there will be a transition period when things will feel much the same, so that’s a bit of puff and nonsense really.

Sterling slips a little on mixed data and Brexit support

Sterling did a little dance overnight after data showed UK house prices slipped in March, but there is still annual growth of 2.1% on the year. That follows a very upbeat manufacturing investment report showing UK companies are using the export boom brought about by a weak Pound to invest for the future. That’s an encouraging story. Sterling was further supported by a strong hint that the opposition party will support the final Brexit deal when it comes before parliament later this year or early next. With the positive news for the UK economy released this morning in the second estimate of Quarter Four Gross Domestic Product (GDP) growth, which was revised up to 1.8% (annual rate), Sterling should ease into the long weekend in much the same place it occupies right now. This morning, the Pound was hovering just below $1.41 and just above €1.14, and while it was sliding once more on Brexit discussion, seems fairly stable for now…

Part of the reason for Sterling’s slip was yesterday’s news that US GDP growth was revised up to 2.9% in Q4. That is up from the previous estimate of 2.5%; a very significant gain. It doesn’t look like there is anything likely to significantly move the USD in today’s data releases, so we may see the USD sidle sideways into the long weekend.

Scope for Canadian Dollar strength
The comments from Steve Verheul, Canada’s chief North Atlantic Free Trade Agreement (NAFTA) negotiator, that a deal was still a long way off will not have cheered Canadian businesses. Roughly 70% of Canada’s exports go to the USA, so a deal on reduced or absent tariffs is very important indeed. We will get Canadian GDP data and industrial production numbers later on and they are forecast to be mildly positive. So there is scope for Canadian Dollar strength ahead of the long weekend.

Little activity on the Euro expected today
There is a smattering of German inflation data this morning but nothing of import from the Eurozone as a whole. As such, we will see little activity in the value of the Euro today.

But not all markets are closed for Easter
However, not all markets are closed for the long weekend in the way that the UK, US, Germany, Spain, Switzerland, Canada and Australasia are. So the thinly traded markets will be susceptible to unexpected news and may well be more volatile than normal. This is prime hunting ground for automated orders. If you have a short term need and would like slightly better than the market is offering at the moment, why not place an order at your desired level and see what happens? It doesn’t cost anything and can be removed cost-free, so what is there to lose? Let us know if you would like to discuss your requirements.

And there has been so much negative news about social media this week; what with Facebook flogging personal data and Twitter censoring free speech, but Chinese authorities got their comeuppance when they tried to censor the visit of the North Korean Leader to China. They blocked content with any mention of Kim Jong Un or North Korea. Undaunted, Chinese internet users chose other terms to get around the block. The favourite term for President Kim was ‘fatty on the train’.  Awkward!
Team Talk

Six minutes into the first game in a school’s rugby tournament, the team manager calls over one of the young players. The manager says, "Do you understand what cooperation is? What a team is?"
The boy nodded vigorously.
"Do you understand that, whether we win or lose, we do so as a team?"
The boy nodded again.
"So," the manager continued, " when you are called offside or a penalty is given against you, you don't argue with or swear at the referee. You accept the decision and get on with the game. That’s the code in rugby. We treat the officials with courtesy and respect. Do you understand all that?"
Again the boy nodded.
"Good," said the manager. "Now go over there and explain all that to your mother."

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news