Pound slides as UK growth falls to six year low
Sterling was back on the defensive again as European markets opened for the week on Monday. The UK currency fell to its weakest position in three weeks as traders grew increasingly pessimistic that Theresa May will come back with any form of concessions from the European Union regarding the Northern Irish border ‘backstop’. The Prime Minister is today expected to present the progress she has made to the House of Commons and it now seems a pretty good bet that she will ask par
US Dollar buoyed by risk aversion
Financial markets worldwide continued to sell-off during the US Thanksgiving holiday. In the absence of any major monetary or economic news, currency markets took their cue from other risk assets and reacted according to script. Commodity currencies like the Australian and New Zealand Dollars and the Norwegian Krone suffered the most, while the USD rallied against every other G10 currency, save the safe haven Japanese Yen and Swiss Franc. The commodity sell-off also drove eme
Euro continues to bounce back as US-China trade talks begin
The Euro continued to recover ground against the US Dollar yesterday, rallying by around half a percent on Tuesday back towards the 1.16 mark. With fears over Turkey taking a back seat for now, investors have unwound many of their recent safe-haven flows and poured back into those currencies deemed riskier, the Euro and indeed Sterling being two of those. This unwinding of safe-haven flows were helped on their way by increased optimism that a deal between the US and China cou
Volatility in Turkey weighs down emerging market currencies
Attention continues to be focused on Turkey, as the Lira responds to political developments swinging wildly in both directions. While major G10 currencies ended the week not far from where they began, the volatility in Turkey spooked emerging market investors. The Lira did, however, manage to post a 6% rebound for the week, a sharp contrast to many of its emerging market peers, most of which ended the week significantly down against the US Dollar.
This week will also be lig
Sterling extends sell-off on risk aversion, mixed UK labour data
The Pound continued to lose ground against a broadly stronger US Dollar on Tuesday, briefly falling below the 1.27 mark this morning, as ongoing concerns over Turkey led to another risk off session. Tuesday’s UK labour report was also very mixed. While there a was an encouraging sharp drop in unemployment to a fresh 43-year low 4.0%, an easing back in earnings growth provides the Bank of England with further reason to be cautious over the timing of its next interest rate hike
Turkish Lira sell-off wreaks havoc with global currency markets
Financial markets remained rocked by last week’s sharp sell-off in the Turkish Lira on Monday. The Lira (TRY) was sold-off violently in the past few days. The currency was sent into freefall on Friday, crashing by over 20% to a fresh record low during a frantic session of trading that wreaked havoc in the foreign exchange markets. Investors fled to the safe-haven US Dollar and Japanese Yen, the former rallying to its strongest position in a little over a year against both Ste
Safe havens Dollar, Yen and Swiss Franc soar as Turkish crisis deepens
A classic emerging market crisis slammed currency markets last week. The Turkish Lira crashed as President Erdogan and his financial advisers appear to be losing control of the situation and make increasingly bizarre and unhelpful statements. The Euro managed a modest rally earlier in the week, but quickly gave it all back as markets started to worry about the impact of the Turkish crisis on certain European banks and the Eurozone economy in general. The Dollar, Swiss Franc a
Major currencies steady ahead of key central bank meetings
Currency markets were relatively quiet on Monday, with the major currencies mostly range bound ahead of a busy couple of weeks of central bank monetary policy meetings. First up will be this Thursday’s European Central Bank meeting. As we mentioned last week, we think that this meeting will be one of the less important meetings of the ECB in a number of months, given the major announcement on the bank’s QE programme is now behind us. The market may instead focus on any commen
The week ahead: Sterling Sinks over mixed Brexit data.
Sterling was the worst performing G10 currency last week. Relatively solid labour data was not enough to offset disappointing inflation figures, and news that Prime Minister May is finding it increasingly difficult to put forth any coherent plan at all, as first the hard Brexit faction and then the pro-EU side of her own party staged loud revolts. It was interesting that the latest volley of rhetoric outbursts from Trump, this time about interest rates and the Dollar, impacte
Sterling tumbles to September lows after retail sales miss
The Pound continued to languish around the 1.30 level against the US Dollar yesterday, with investors dialling back bets on a Bank of England interest rate hike following Wednesday's soft inflation print. Ahead of next month's MPC meeting, markets are now placing around a 70% of a rate hike after inflation held steady at 2.4% for June, in contrast to the 80% probability earlier in the week. Sterling was already firmly on the back foot before the release, with investors becomi