Currencies Direct Weekly Market Analysis
| Currencies Direct Weekly Market AnalysisThe Carney Effect BeginsJuly 5th, 2013 |
| Welcome to your weekly market analysis email from Currencies Direct where you can stay one step ahead of your friends on the latest news and reviews of the financial markets. Our aim is to provide you with an easily digestible weekly update of how the financial market is performing using the expertise of your dealers who make it their sole aim to keep on top of the market movements.USDThe US Dollar has been the biggest winner this week with all roads pointing to a strong confidence and recovery coming from stateside. It started the week as it meant to go on, with ISM Manufacturing Index hitting a 3 month high on Monday and another fall in the unemployment figures adding further weight to help sink GBP/USD and EUR/USD further towards their 2013 lows. It was Independence day on Thursday, and with the help of the dovish central bank releases from Europe on Thursday, the US Dollar was riding high before all eyes were squarely focussed on Friday’s Non-Farm Payroll figure. The expectations were that the US Jobs market had grown by a steady 165k jobs but, as is normally the case with America, bigger is better and a figure of 195k new jobs were created in June. This instantly strengthened the US Dollar against its UK and European counterparts pushing cable down to 1.4856 and EUR/USD to test the 1.28 barrier. All in all, market expectations are that the Fed will taper its current monetary stimulus in September and with data continuing to show positive signs then it is likely that USD strength is here to stay… For a while at least.
GBP This week marked Mark Carney’s first week at the helm of the Bank of England. The markets expected a change in policy from the central bank and that is exactly what Mr Carney delivered, suggesting forward guidance on monetary policy will start to be used from August onwards. The Pound remains under real pressure across the board but particularly against the USD as both the BoE and ECB look to counter tapering talk on the other side of the Atlantic. It looks as though we are entering an interesting time for currencies, as central banks finally begin to follow slightly divergent policies. EUR The ECB also coincidentally told the markets that rates will stay low for an extended period, very importantly suggested the decision to offer the forward guidance was surprisingly unanimous and they also discussed lowering rates again at this meeting. The European Central Bank had a tough juggling act today to reassure the markets that the slow recovery is intact and that it is ready to act and has the tools required to act if needed to support the economy. Recent data from Germany and France have been encouraging but concerns from Portugal serve to underline the pressures that are still bubbling in the periphery. The two announcements of the ECB and BoE taken together can be seen as a clear push back by Central banks on this side of the Atlantic to the Federal Reserve tapering announcement last month. This has led to a slide in both the pound and the euro against the greenback. The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information.
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