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November 2015

Daily Currency Insight

Published: Monday 23 November 2015

 
  • Sterling slips on retail sales and EU concerns
  • USD could benefit from oil slide

It is the US Thanksgiving Day on Thursday or 'judgement day' as it's known amongst US Turkeys. This commemorates the first harvest meal had by the settlers who reached Plymouth Rock in 1621 but the meal probably had venison, beef, fish and other meats as well as fowl (it's not certain which kind of fowl that refers to), so what did the turkeys do to warrant such singling out? Well they are a wild bird native to North America and, if Benjamin Franklin had got his way, the turkey may even have replaced the Bald Eagle as the symbol of America. That wouldn't have gone down well. Either way, to all our American readers, I hope your Thanksgiving Day preparations are going well and hope you can get everything you need to do sorted by Wednesday evening.
 
For the rest of us, that means the foreign exchange market will be much less liquid on Thursday and Friday and means there will be a bit of frantic preparation in traders' minds as well; especially US traders.
 
As for the US Dollar, well there is a lot of talk about the price of oil falling further. One report even suggested it could dip to $20 a barrel which would be alarming when you consider it was trading at $115 a barrel in the middle of last year and peaked above $140 a barrel in 2008. A weaker commodity market tends to strengthen the US Dollar as commodities are largely traded in USD. This story combined with the expectation of an early interest rate hike from the Federal Reserve serves to suggest we will see USD strength in the months ahead.
 
Sterling finished last week on a small downward move after poor retail sales and, perhaps in reaction to the murderous events in Europe. Meetings are being held to consider how Europe and others might best respond to the threat of ISIL or 'daesh' as they are becoming increasingly known.  The lock down in Brussels and the ongoing manhunts are keeping the story very live and that undoubtedly has a negative effect on tourism, on business and on the prospects for Europe's economic recovery. AS Europe is Britain's largest export market, the ongoing effects are obvious.
 
The week ahead brings purchasing managers indices from a number of countries and the EU as well as revised economic growth data for the UK and others. It is also the last trading week of the month and has the Thanksgiving Day interruptions. Volatility is, I would speculate, unavoidable. For your own requirements, this is a terrific week in which to use automated orders to your advantage; either to protect against risk or to capture improved rates on spikes.
 
Have a good one.
 
New Running Back
 
An American football team had just finished their daily practice session when a large turkey came strutting onto the field. While the players gazed in amazement, the turkey walked up to the head coach and demanded a try out. Everyone stared in silence as the turkey caught pass after pass and ran right through the defensive line. When the turkey returned to the side-lines, the coach shouted, "You're the best running back I've ever seen. Sign up for the season, and I'll see to it that you get a huge bonus."
"Forget the bonus," said the turkey, "All I want to know is, does the season carry on after Thanksgiving Day?"