What a year 2018 was; the royal wedding, never-ending summer sunshine, England’s fantastic world cup run, Trump trade wars, the worst year for stock markets in a decade, Theresa May surviving a no-confidence vote along with hearing the word ‘Brexit’ every other day…
It’s not all doom and gloom as many in the media (and government) like to portray. Once we have clarity on Brexit, uncertainty will start to ebb and the markets, Sterling and even our MP’s can get back to a closer version of normality.
In the interim, rest assured that we will be here to protect you from market risk and keep you up to date with developments that may affect you and your business.
Here’s to a happy, healthy and prosperous 2019!
Sterling was hit by last week’s flash crash in the currency markets with GBP/USD plunging to its lowest level since April 2017. The pair rose on Friday however after service PMI surpassed expectations and has continued to inch north this morning to a daily peak of 1.2775.
Investors are on the lookout for Brexit related headlines with Theresa May still facing the difficult task of getting her Brexit deal through parliament next Tuesday (15th). The prime minister has said the UK would be in ‘’unchartered territory’’ if MP’s reject her Brexit deal, as she refused to rule out bringing the deal back to parliament multiple times. Further reassurances on key points including the controversial backstop may allow the PM to gain the support required from MP’s.
Data wise, GDP, manufacturing production and trade figures are due on Friday while Bank of England Governor Carney speaks on Wednesday.
The Dollar Index has kicked of the week on the back foot and is flirting with last week’s two-month low at 95.82. The global reserve currency had a volatile finish to the week, rallying on the stellar payrolls number (312k vs forecasts of 177k) before falling back just as fast on dovish remarks from Fed Chair Jerome Powell.
Looking ahead, ISM non-manufacturing is out later today, followed by trade data on Wednesday and CPI on Friday.
The Euro showed impressive resilience last week with little reaction shown to weaker-than-expected Euro Zone CPI and PMI data released on Friday.
EUR/USD has pressed ahead this morning meanwhile to a daily peak of 1.1469 as Euro Zone Sentix investor confidence and retail sales surprised to the upside. Confidence indicators follow tomorrow while the ECB minutes are due on Thursday.
The Japanese Yen saw some sizeable moves last week, mostly contained in Thursday’s Asian trading session where thin trading conditions likely exaggerated the move – USD/JPY plunged to its lowest level since March at ¥104.75.
The Yen faced selling pressure on Friday as risk sentiment rebounded, while investors also took note of comments from Bank of Japan Governor Kuroda and currency chief Asakawa.
Looking ahead, wage data is out on Wednesday and leading index and household spending on Thursday.
Domestic impulses have been limited for the Franc so far this year. Ignoring last week’s flash-crash, EUR/CHF settled in a 1.12-1.13 range with little reaction shown to Friday’s risk rally which weighed on other perceived safe-haven currencies.
Unemployment data and retail sales are out tomorrow followed by CPI on Wednesday.
The Australian Dollar rose sharply on Friday, boosted by rising oil prices, positive trade developments and a PBOC rate cut. AUD/USD has extended above Friday’s peak this morning to a fresh two-week high of 0.7142 after the positive risk sentiment carried through the weekend.
Trade figures are out tomorrow, NAB confidence indicators on Thursday and retail sales on Friday
NEW ZEALAND DOLLAR
The New Zealand Dollar finished Friday on the front foot and has continued higher this morning to a fresh one-week peak of 0.6764. Rising oil prices have underpinned the Antipodean currency while Friday’s PBOC rate cut also provided support.
USD/CAD fell to a fresh three week low this morning at 1.3345 as the Canadian Dollar continues to derive support from rising oil prices. Stronger-than-expected jobs data released on Friday has also played its part with investors now looking ahead to Wednesday’s Bank of Canada policy decision where the key policy rate is expected to remain on hold.
Fresh impulses for the Swedish Krona have been limited so far this year. USD/SEK failed to hold above the 9.0 level last week as high-beta currencies benefitted from the broad improvement in risk sentiment as domestic impulses, including a soft service PMI print, were largely ignored.
Industrial production figures on Thursday are this week’s only release of note.
The Norwegian Krone finished Friday on the front foot, boosted by the broad improvement in risk sentiment and has continued the trend this morning with USD/NOK reaching a fresh one-week low of 8.5711 and EUR/NOK flirting with 9.8. Rising oil prices have underpinned the Krone with Brent crude futures up around two-percent versus Friday’s close.
Manufacturing production data is out tomorrow ahead of CPI figures on Thursday.