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January 2016

Daily Currency Insight

Published: Thursday 14 January 2016

  • Fed Beige Book showing expansion
  • Asian markets volatile and Australia reported improved employment numbers
  • BoE MPC meetings & minutes
  • US jobless claims numbers
 
The Dollar weakened overnight as the Beige Book, a measure of economic conditions in the United States, was released. Although economic activity expanded in the majority of regions with improvements in the job market and increased consumer spending, this had been offset by a stronger Dollar and lower energy prices. Manufacturing was particularly weak and the surge in the Dollar is certainly having a negative impact on demand. The Greenback weakened on the news and is now trading over a cent higher versus the Euro since the positive Non-Farm Payrolls data release.
 
Overnight, improved employment data from Australia strengthened the Dollar. Unemployment remained steady at 5.8 per cent as employment rose by 17,600 in December. Most analysts had expected a fall of around 12,500 after the very strong readings over the last couple of months but it seems that they have been caught out by the strength of the service sector.
 
Today the focus will be in the UK as policy makers at the Bank of England make a decision on interest rates. They are widely expected to leave rates unchanged and Quantitative Easing (QE) on hold but the minutes of the meeting will be very closely scrutinised for any clues as to when the next move will take place. We also get the usual labour data from the US this afternoon but the Dollar will more likely take its cue from Retail sales data which is due to be released tomorrow afternoon.
 

Gone fishing 

A guy calls his wife and says he has been invited by the boss to go on a fishing trip to Ireland. He says they are driving down to catch the ferry this afternoon so could she throw some clothes into an overnight bag for him and can she put his new silk pyjamas in as well. He said he would stop off on the way from the office and grab the overnight bag plus his rods and tackle.
She thinks this all sounds a little odd but she does as he asks. He pops in, gathers his things, gives her a peck on the cheek and is off.
Two days later he comes home.
"How was the fishing?" she asks.
"Great", he says. "Caught trout and salmon and we also got a few carp in the lake. Amazing."
"Did you have everything you needed?" she asks.
"Yes I did", he says "although you didn't pack my silk pyjamas as I asked."
"Oh I did", she says. "They were in your tackle box.   
 
 
FX Research by Ricky Nelson
Daily Currency Analysis with Chris Verdet