Hawkish Fed and Dovish RBNZ Bring Volatility

Raphael Sonabend, FX Analyst

Volatility was seen throughout the FX markets yesterday as the Fed released a hawkish statement, Carney attacked the Eurozone’s austerity and the Royal Bank of New Zealand (RBNZ) held their cash rate at 3.50%. Yellen’s statement yesterday upgraded economic expansion from ‘moderate’ to ‘solid’ and job gains from ‘solid’ to ‘strong’. Regarding global outlook, the Fed discussed the risks of economies worldwide for the first time since January 2013, saying that “financial and international developments” would weigh on the timing of the first interest rate hike. In Dublin, Carney reiterated the need for structural reforms in the Eurozone, saying that fiscal union is necessary for improvement. Finally in New Zealand, the RBNZ have begun feeling the impacts of a global slowdown and announced that their next cash rate decision could take the rate up or down. Trading focus today will be on US unemployment claims at 13:30 and the German preliminary CPI, which is released throughout the day from six states. With US data forecast to improve and German data predicted to weaken, we could see recent trends continue as the dollar gains and euro weakens.



GBP/EUR: Currently trading at 1.3382

• Steady Sterling gains throughout the day yesterday saw the rate rise from 1.3356 to 1.3416. In a speech entitled ‘Fortune favours the bold’, Carney attacked German austerity (although not by name). Carney stressed the importance of larger countries supporting economies that are struggling with big debts. In essence, Carney is repeating other economist’s words that Germany needs to support struggling countries like Spain or Italy. Whilst he said nothing new, the pound still strengthened against the euro as a result.
• The usual end-of-the-month data is being released this week, none of which has had much impact on the FX markets. German preliminary CPI is being released throughout the day today and volatility could be seen until all six states have reported their figures. With the overall figure forecast to drop off to -0.8% from 0.0%, the euro could continue to weaken throughout the day.

GBP/USD: Currently trading at 1.5119

• The dollar strengthened yesterday as a result of a hawkish Fed statement that provided positive (and some would say bullish) views of the US economic outlook. The statement also repeated that when deciding the first interest rate hike, the Fed would be ‘patient’. Furthermore, the Fed upgraded their view of economic activity from a ‘moderate pace’ to a ‘solid pace’.
• On the back of a hawkish statement, the greenback could continue to post gains throughout today’s session. Further support could be provided by US unemployment claims this afternoon, which are forecast to drop off from 307K to 301K.

EUR/USD: Currently trading at 1.1295

• The Fed’s statement saw strong dollar gains throughout yesterday’s session as this rate fell from 1.137 to 1.128. Slight volatility seen this morning as the first of the German states to announce their CPI has reported a fall of -1.2% from 0.2% previously. German unemployment change this morning rose from -25K to -9K and the euro has received some support as a result.
• Trading later today will focus on US unemployment claims in the afternoon and German preliminary CPI throughout the day. With US unemployment forecast to improve and German CPI predicted to worsen, the dollar could continue to post gains throughout the day.

GBP/AUD: Currently trading at 1.9319

• The pound reclaimed recent losses against the Aussie yesterday after the RBNZ announced that they will be maintaining their 3.50% Official Cash Rate. This announcement tipped the volatile seesaw of RBA cash rate speculation in favour of rate cuts.
• Any data released in the run up to Tuesday’s RBA meeting could have an exaggerated impact on the market as investors anticipate the bank’s decision. Therefore, the Aussie PPI data early tomorrow morning (at 00:30) could generate significant volatility if it falls too far either side of the predicted level.

GBP/NZD: Currently trading at 2.0725

• The Kiwi fell three cent against the pound yesterday after the RBNZ announced the end to monetary tightening and held their Official Cash Rate (OCR) at 3.5%. The bank has echoed words of other central banks, stating that whilst falling oil prices are positive, poor global outlook could impact upon exports. The RBNZ, who have previously been described as ‘racing against the Fed to raise interest rates’, announced that the next OCR movement could be up or down. The bank further repeated their opinion that the Kiwi is overvalued against counterparts.
• With no data of impact due out today, the pound could continue to gain on the NZD on the back of yesterday’s statement. NZ building consents and visitors arrivals data, which is due out this evening, are unlikely to push this pair too far in either direction.

GBP/CAD: Currently trading at 1.8937

• The pound continued to trend higher yesterday as the Loonie struggled to find any support and the Fed statement saw a strong CAD/USD sell-off in favour of the greenback.
• Limited pairing specific data will cast the focus on US unemployment claims this afternoon, which have been predicted to decline, the Loonie could therefore continue to weaken.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

UK GDP Delivers Mixed Results

Raphael Sonabend, FX Analyst

UK quarterly GDP yesterday fell to 0.5% from 0.7% whilst annual growth rose by 2.6%, the strongest growth since 2007. The outlook for the UK economy remains positive as analysts generally agree that the full effects of falling oil prices have not yet been felt. US durable goods orders data was surprisingly poor yesterday as the oil price slump could not compensate for a strong dollar and orders fell compared to the previous month. Strong Australian CPI figures this morning have subdued speculation that the RBA will cut their cash rate next Tuesday. Whilst their decision will not be announced until the meeting next week, any hints beforehand should lead to volatility in Aussie pairings. Today’s trading will centre on the US and NZ statements this evening at 19:00 and 20:00 respectively. The Fed will release their first statement of the year about monetary policy as well as announcing the funds rate. Strong US figures should allow for hawkish statement but the real focus will be on any hints of when the first interest rate hike should be; analysts do not anticipate the funds rate being altered.



GBP/EUR: Currently trading at 1.3389

• Poor data out of the UK yesterday morning saw the euro push this rate back down towards the 1.33 mark. Meeting resistance at 1.331, this pair then traded with sideways movement around 1.336. UK preliminary quarterly GDP fell to 0.5% from 0.7% (and below the forecast 0.6%), whilst BBA mortgage approvals fell to 35.7K from 36.7K. Whilst some economists remained positive regarding GDP, saying that falling oil prices and unemployment would continue to boost growth, others were wary of potential downside risks from the Eurozone.
• With no data due out of the UK or Eurozone today, level trading could continue throughout the day. A dovish Fed statement out of the US today could bring some euro strength if there are any hints that the dollar has been overbought.

GBP/USD: Currently trading at 1.5193

• Mediocre UK data, coupled with strong US data, saw Cable rise just under two cent. US durable goods orders fell to -3.4% from -0.9% and core durable goods orders (which excludes transportation items) fell from -0.7% to -0.8%. The unexpected drop was driven by a surging dollar and the backlash of a global slowdown. However, despite these low figures, analysts have remained positive as ‘cars and light trucks’ sold at a 16.8 million annualised rate last month, capping the year off as the best annual performance since 2006. US CB consumer confidence rose to 102.9 from 93.1 as falling oil prices continue to boost optimism.
• Focus for today’s trading will be on the Fed statement tonight. The dollar, which has recovered some lost ground in this morning’s session, could continue to advance on the pound in today’s quiet. A hawkish FOMC statement should see the dollar strengthening and after recent strong US figures, a confident report is expected.

EUR/USD: Currently trading at 1.1343

• The greenback managed to weaken yesterday following unexpected poor US durable goods orders, allowing the euro to temporarily break above 1.14. This was short lived as strong new home sales data and a positive consumer confidence survey released later on in the afternoon enabled the dollar to recover its lost ground. 
• This morning’s monthly German consumer confidence survey saw the euro make small gains in what is expected to be a fairly range-bound day of trading, with no major announcements expected until US Fed members convene later this evening. With a positive economic outlook for the US, a hawkish sentiment is expected from the Fed so we may see the dollar strengthen further following the meeting.

GBP/AUD: Currently trading at 1.9026

• On the back of poor US data yesterday afternoon, along with strong UK annual GDP figures, we witnessed the rate move further in favour of the pound, peaking around the 1.92 mark yesterday evening. In an unexpected turn of events, Aussie core inflation figures recorded a 0.7% quarterly increase which helped to alleviate doubt that the RBA would follow the Canadians in cutting their cash rate; all will be decided next Tuesday. Strong figures saw the Aussie gain three cent before finding resistance around 1.895. 
• With little data scheduled for release from either side of the pairing for the remainder of this week, investors will be looking towards the series of US announcements for any market volatility.

GBP/NZD: Currently trading at 2.0353

• Whilst quarterly UK GDP fell below expectations, annual GDP rose by 2.6%, the fastest growth of any major economy and the UK’s strongest growth since 2007. Traders focused on the more positive side of this release and the pound strengthened against the Kiwi as a result. This morning has seen trading in favour of the Kiwi and this trend could continue throughout the day.
• Trading today will centre on the RBNZ’s rate statement at 20:00 tonight. In anticipation of tonight’s meeting, volatility could be seen in this pairing towards the end of the day’s session.

GBP/CAD: Currently trading at 1.8894

• Weak oil prices, coupled with a lack of data to support the Loonie, have seen the pound continue to post steady gains against the Canadian dollar.  UK quarterly GDP fell short of economists forecast’s as the production and construction sectors shrank last quarter. Rather than giving the Loonie a lift, the pairing traded sideways.  
• Another quiet calendar today means investors will look at the US statement tonight for hints regarding monetary policy.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

UK GDP Back on Centre Stage

Raphael Sonabend, FX Analyst

As was largely expected, the results of the Greek elections were already priced into the markets and the immediate reaction seen in the Asian markets was quickly reversed. In fact, the euro managed to gain against the majority of its counterparts in yesterday’s session as German confidence figures increased. UK GDP at 9:30 this morning is forecast to fall from 0.7% to 0.6% whilst BBA mortgage approvals is predicted to fall by 0.1K. US durable goods orders are due at 13:30 and new home sales data is due at 15:00. After strong housing data was released last week, it would not be surprising if new home sales surpasses expectations.



GBP/EUR: Currently trading at 1.3338

• On the back of strong German Ifo Business Climate results, the euro strengthened against the pound, gaining just over a cent yesterday morning. Optimism has been boosted in the light of falling oil prices and in anticipation of the ECB’s QE stimulus plan. Increasing optimism may be seen in all Eurozone countries as the ECB’s QE programme is due to start soon.
• UK figures this morning are forecast to drop off slightly with preliminary quarterly GDP predicted to drop off from 0.7% to 0.6% and BBA mortgage approvals (which were meant to be released yesterday) predicted to fall from 36.7K to 36.6K. With UK data forecast to be poor, we could see the euro attempt another day of gains.

GBP/USD: Currently trading at 1.5105

• As UK mortgage data was delayed by 24 hours, neither country saw any figures released yesterday, which proved beneficial for the pound. After the results of the Greek election were largely priced into the markets, EUR/USD rose in the euro’s favour and the dollar fell against the euro and pound.
• The pound’s gains are unlikely to continue today as data from the UK is predicted to fall whilst US data is forecast to increase. US durable goods orders this afternoon are forecast to rise from -0.9% to 0.6% and the actual result could exceed forecasts as falling oil prices are likely to boost transportation orders.

EUR/USD: Currently trading at 1.1326

• Like FX dalles, constricted by 1.114 and 1.130, this pair saw a range-bound day of trading, with the euro making some gains and coming out on top. As the outcome of the Greek elections were more or less priced into the markets, the actions of the ECB will be the main factor to weigh in on the pairing in the medium-long term.
• With no data out of the Eurozone, announcements out of the US today should provide the USD with the potential to strengthen against the euro. Durable goods orders and new home sales are forecast to increase, while a consumer confidence survey released later this afternoon is expected to yield positive results. We therefore expect to see some price action on the dollar upside.

GBP/AUD: Currently trading at 1.8994

• A relatively quiet day yesterday as the pound and Aussie struggled for strength, with the rate closing only slightly above opening. This morning has seen Aussie gains as the National Australia Bank business confidence survey increased from 1.0 to 2.0. Looking at this result in slightly more detail highlights the true weakness behind its mask: business conditions fell from +5 to +4 and business confidence in fact only increased by 0.1, which saw the figure rounded up. AUD gains may therefore be limited.
• With UK data forecast to drop off slightly and US figures predicted to improve, today is likely to bring another GBP/AUD struggle to be on top. Similar trends to yesterday are likely to prevail and range-bound trading could continue.

GBP/NZD: Currently trading at 2.0283

• A poor day for the Kiwi yesterday as the pound gained around two cent over the course of the day. This may have been a result of the USD being over-bought after an immediate EUR/USD sell-off that occurred in the Asian markets after Syriza won the Greek elections.
• With no NZ data out today our focus will instead be on UK and US data. UK GDP is forecast to drop off slightly this morning and US data is predicted to improve this afternoon. The Kiwi may therefore recover some lost ground in today’s session.

GBP/CAD: Currently trading at 1.8804

• The Loonie fell against the pound yesterday as oil prices continued to slide. Brent LCOC1 fell 1.3% as traders discounted comments from OPEC officials who said that oil may have hit a floor and will soon rebound.
• Focus today will be on UK data in the morning and US data in the afternoon. As UK data is forecast to drop off and US figures are predicted to increase, the Loonie may find opportunities to recover some lost ground against the pound.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Euro Staggers After Greek Elections

Raphael Sonabend, FX Analyst

In an unsurprising result, the left-wing Syriza party won the Greek elections. The leader, Alexis Tsipras, has vowed to end Greece’s “five years of humiliation and pain” whilst leaders worldwide have expressed apprehension about what this means for the Eurozone. Since joining the Eurozone in 2001, Greece has seen crises after crises, which have radiated throughout Euro-area countries. With Syriza now in power, economists and politicians have raised concerns about the fresh crisis this could bring. As Syriza previously stated that they want to take Greece out of the Eurozone, worries of a “Grexit” will be reignited. Whilst the euro fell after this result, it has since recovered in this morning’s session. As this widely expected result was largely priced into the markets, a quiet day today may allow for some euro gains.



GBP/EUR: Currently trading at 1.3357

• Last Friday saw an unexpected result from UK retail sales as a surprising surge in food sales brought a positive result. Forecast to fall by -0.6%, the result was in fact an increase of 0.4%. Sterling’s strength continued as traders’ focus turned to the Greek elections. As predicted, Syriza won the Greek elections and as a result the euro dropped once again. This pair briefly traded above 1.35 before the euro resisted further gains. As articles worldwide have described this win as placing Greece on a collision course with the Eurozone, the immediate reaction was one of worry. However we have seen euro make solid gains in this morning’s session.
• After the German Ifo Business Climate survey this morning, which came in line with predictions and saw continued euro strength, our focus for the day will be on the UK BBA mortgage approvals this morning. Forecast to drop slightly from 36.7K to 36.6K, euro strength could continue throughout the day.

GBP/USD: Currently trading at 1.5015

• After a week of volatility, Friday finally saw some respite for this pairing. Trading on Friday between 1.504 and 1.495, this pair was unaffected by the Greek elections.
• With no US data out today, our focus will be on UK mortgage approvals this morning. Despite forecasts predicting a slight drop, we anticipate the pound will attempt to recover some of the losses made last week.

EUR/USD: Currently trading at 1.1238

• With Draghi not disappointing on his big QE announcement on Thursday, the pairing managed a weekly close of 1.12, the lowest it has been in over 11 years. It will be interesting to watch how the markets digest yesterday’s news out of Greece, where the anti-austerity party Syriza won the general election, raising concerns of Greece’s position in the Eurozone. Some traders will now be questioning whether this pairing could soon be at parity.
• As a quiet day is due in the forex calendar today, the day’s activity is set to be influenced by yesterday’s events in Greece.

GBP/AUD: Currently trading at 1.9011

• Following an extremely volatile week, which saw the rate climb almost 5 cent to peak around the 1.90 mark, the pound found further strength after the Greek elections yesterday and this pair jumped another cent.
• This week also presents us with another busy economic schedule, kicking off with the UK BBA mortgage approvals this morning, which are forecast to cool off slightly. Traders will then be looking towards the Aussie business confidence survey results in the early hours of tomorrow morning.

GBP/NZD: Currently trading at 2.0182

• In the first week of 2015, the pound lost eight cent on the Kiwi however last week saw all these losses being reversed and Sterling begun to post gains of its own. Now trading above 2.015, the pound looks set to continue on its advances, at least until the RBNZ rate statement on Wednesday.
• Poor NZ credit card spending this morning helped the pound gain further on the Kiwi and our focus for the rest of the day will be on UK mortgage approvals this morning. The slight drop predicted is unlikely to affect this pairing too much and the pound’s gains could continue for the rest of the day.

GBP/CAD: Currently trading at 1.8719

• UK retail sales surprisingly rose in December, with consumers buying more food and fuel on the back of falling oil prices.  Economists were predicting a drop after shoppers took advantage of November’s Black Friday sales. A slight rise in oil prices last week saw the Loonie posting gains against the pound however these were quickly reversed as Canadian CPI registered a larger fall than forecast.
• With a quiet day due in the FX calendar, the pound could continue to advance in today’s session.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Draghi's QE Doesn't Disappoint

Raphael Sonabend, FX Analyst

Draghi came, Draghi saw, and three and a half years later, Draghi implemented QE. Whether or not he conquered, remains to be seen. Wasting no time yesterday, he announced the purchase of sovereign bonds less than a minute into his speech. As sources ‘in the know’ ardently claimed the plan would involve pumping €50Bn a month into the economy, Draghi in fact announced a scheme of €60Bn a month from March 2015 to September 2016 (totalling €1.1trn). Despite this total figure being larger than the ECB need to meet their goal of expanding their balance sheet by €1trn, analysts are already claiming that it won’t be enough to raise inflation. Draghi himself stated that structural reforms were necessary within all Euro-area countries, a phrase he has repeated several times over the past few years. The euro slumped against all counterparts yesterday as Draghi’s plan exceeded predictions. Data today is unlikely to have too much affect as analysts continue to asses Draghi’s words, reports on the conference are more likely to create impact. At 09:30, retail sales from the UK are forecast to fall to -0.6% from 1.6%, a low prediction but not a surprising one as shops were deserted after Black Friday sales. At 13:30, Canadian monthly CPI is forecast to fall to -0.5% from -0.4% however after the BOC report earlier in the week, this is likely to have already been priced into the markets. With the Greek election on Sunday, volatility could continue throughout today’s session.


GBP/EUR: Currently trading at 1.3280

• Draghi’s speech saw the euro plummet against the pound and this pair managed to breach 1.323 in this morning’s session.  With the Greek elections coming up on Sunday, we anticipate another day of volatility, possibly with the pound covering more ground against the euro. Draghi’s words promised a larger-than-expected stimulus plan, whilst compromising with Germany so that central banks would bear the risks that this plan could present.
• Early morning Eurozone data has seen French flash manufacturing PMI rise to 49.5 whilst German flash manufacturing PMI fell to 51.0.  The pound’s gains could continue throughout the day, despite UK figures predicted to drop off this morning. As the pound continues to climb on the euro, traders will be considering whether 1.33 could soon be broken.

GBP/USD: Currently trading at 1.4980

• Unsurprisingly, we saw another large EUR/USD sell-off during Draghi’s speech and the dollar therefore gained against all counterparts. Cable fell to the lowest level since July 2013 and the pound is currently struggling to limit the greenback’s gains. Whilst the BoE claim that the Eurozone’s plan should be beneficial for the UK economy, traders preferred to invest in the dollar, which is considered to be a ‘safer’ currency.
• Poor UK retail sales today could provide more momentum in the dollar gains. However trading is more likely to focus on speculation prior to the Greek elections on Sunday.

EUR/USD: Currently trading at 1.1280

• This pair has fallen from 1.1650 to below 1.127 since the start of Draghi’s speech yesterday afternoon. After Canada cut their overnight rate, ECB announced QE, and Syriza led the polls, the dollar has become an unstoppable force, especially against the euro. With the Greek elections only two days away, the dollar could continue to surge.
• Today’s trading is likely to see volatile trends continue. Mediocre Eurozone data this morning has seen no effect on this pairing whilst poor Canadian CPI data this afternoon could help dollar gains.

GBP/AUD: Currently trading at 1.8814

• The pound continued to gain on the Aussie yesterday as traders favoured Sterling over the euro after Draghi’s speech. Climbing two cent over the course of the day, the pound could continue to rise over the weekend. After the BOC cut their overnight rate and the Aussie plummeted, speculation immediately began over whether or not the RBA would cut their bank rate on 3rd-Feb (some economists have predicted a 40% chance of this happening).
• Sterling gains could continue throughout the day as volatile trading continues. As with all commodity currencies the Aussie should receive strength from a powerful dollar however this is unlikely to happen today.

GBP/NZD: Currently trading at 2.0024

• This pair traded within its usual large range yesterday and was mostly unaffected by the ECB meeting. This does not come as a surprise as the Kiwi would have received strength on the back of the greenback’s gains.
• UK data today could have an effect on this pairing and Kiwi-traders will therefore turn to retail sales this morning. Forecast to fall -1.6%, this low figure is unsurprising after a drop in sales following Black Friday deals.

GBP/CAD: Currently trading at 1.8578

• Following the BOC’s announcement that their overnight rate would be cut, the pound gained almost five cent on the Loonie; two cent of this was recovered by the CAD in yesterday’s session. Whilst the Loonie attempted to gain further on the pound, poor Canadian figures and a negative report limited its advances.
• Low UK retail sales today could aid the attacking Loonie in covering more ground against Sterling however disappointing Canadian CPI data could prevent heavy gains. A Syriza win on Sunday could also help the Canadian dollar as traders are likely to buy USD and sell-off euro.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

ECB Meeting Rules the Day

Raphael Sonabend, FX Analyst

In a surprising move, the two hawks of the BoE’s monetary policy committee (MPC) voted to hold interest rates for the first time in six months. A unanimous vote to hold rates at the current level saw the pound fall against all counterparts as analysts concurred that an interest rate hike isn’t likely to happen until 2016. The pound quickly recovered all lost ground as the markets adjusted to this news and employment data came into the spotlight. The action didn’t stop there, across the pond the Bank of Canada cut their overnight rate from 1.00% to 0.75% and the Loonie fell four cent against the pound. Volatility is likely to continue into today’s session as the ECB press conference is finally upon us. As full-blow quantitative easing is expected to be announced, economists will be furiously debating the conditions of this stimulus plan. How much money will Draghi pump into the economy? How much pressure will be placed on central banks? Did the recent ECB stress tests account for this new amount of pressure? How far can Germany be pushed? All these questions and more should be answered (or swiftly avoided) by Draghi at 13:30 today in an hour long conference.



GBP/EUR: Currently trading at 1.3050

• As the MPC cut interest rates yesterday, the pound immediately fell one and a half cent against the euro. The euro’s gains failed to hold as traders quickly turned their attention to the positive employment figures that raised optimism once again. Average earnings index 3m/y increased to 1.7% from 1.4%, as earnings outpace inflation, consumer confidence increases as spending money rises.
• All focus today will be on the ECB meeting this afternoon. Whilst the general consensus is that the arrival of QE has been widely priced into the markets, if the amount Draghi announces is below predictions, we may see another euro slump.

GBP/USD: Currently trading at 1.5151

• Cable saw volatility yesterday as this pair traded within a cent range after the MPC cut interest rates. A combination of mixed US data and strong UK employment figures saw the pound recover all lost ground in the evening. US monthly building permits data fell to 1.03M from 1.05M, below the forecast 1.06M. December saw the most single-family homes starts in almost seven years, a strong sign for 2015 construction.
• US unemployment claims are likely to be overshadowed by the ECB press conference, which begins at the same time as the US release. Whilst the EUR/USD fall that occurred last week is likely to be the last in anticipation of QE, there is a possibility of another if there are any more surprises and the dollar would strengthen against the pound as a result.

EUR/USD: Currently trading at 1.1612

• A lot of volatility seen in this pairing yesterday as traders anticipated the QE announcement today and results from the latest Greek election polls were released. In Greece, the latest poll showed Syriza in the lead with a 5% gap between them and the conservatives. As tensions rose, this pair slumped then spiked a cent.
• The ECB meeting will lead the way for trading today. Speculation this morning will govern the rate before the actual conference pulls focus this afternoon. After a dovish day for central banks yesterday, traders will be hoping to spot some hawks this afternoon.

GBP/AUD: Currently trading at 1.8698

• As the Bank of Canada cut their overnight rate yesterday afternoon, traders sold their Canadian dollars in favour of safer currencies. As the Aussie attempted a run over 1.00 against the Loonie, GBP/CAD surged 1.32% and Sterling managed to rise against the Australian dollar. Now trading around 1.87, the Aussie is likely to try to recover as much ground as possible in this morning’s session.
• The ECB conference today will shake the whole FX market and commodity currencies could be especially affected as a result. A greenback hike, which could occur after the announcement, would lead to strength from all higher-yielding currencies.

GBP/NZD: Currently trading at 2.0083

• Following identical trends to GBP/AUD, this pair saw Sterling strength after the Bank of Canada cut interest rates. Jumping four cent yesterday afternoon, the Kiwi is now struggling to recover as this pair is once again above 2.00.
• After a week of surprises from central banks worldwide, the ECB could share its own revelations this afternoon. As volatility is likely to continue throughout the day, strong gains from both sides are possible throughout.

GBP/CAD: Currently trading at 1.8707

• In a shock move that sent waves through the markets, the Bank of Canada cut their overnight rate from 1.00% to 0.75%. In a monetary policy report, which was both negative and pessimistic, the BOC stated that inflation is likely to fall below 1.00% sometime in the first half of 2015. Their graphs paint an even more negative picture as their uncertainty levels suggest that CPI falling below 0.00%, is a strong possibility. As oil prices continue to fall, the Canadian economy is now relying on strong US activity for upside risks to inflation.
• Volatility is expected throughout the day as the ECB meeting approaches. After yesterday’s report, the Loonie may fare poorly in the midst of volatility however USD strength could help stimulate a Loonie recovery.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

UK Employment Figures Lead the Day

Raphael Sonabend, FX Analyst

A few days out of the spotlight proved beneficial for the pound as it rose almost two cent against the majority of its counterparts yesterday. As UK figures were put on the backburner in the midst of speculation surrounding the ECB meeting tomorrow, the UK is firmly back on centre stage as employment figures are due out today. At 9:30, average earnings index, claimant count change and the MPC official bank rate vote are due to be released. Traders will likely set their focus on the average earnings index, which holds more importance after recent low inflation figures. The official bank rate vote is likely to remain at two votes to increase rates and nine votes to hold rates. Ahead of the ECB meeting tomorrow, analysts have been predicting the amount of money the ECB will print as part of their stimulus plan. As new forecasts emerge, volatility spikes in euro pairings and we anticipate this trend will continue throughout today’s session.



GBP/EUR: Currently trading at 1.3095
The pound continued to climb yesterday, gaining almost two cent on the euro throughout the day. Eurozone data, which saw strong figures, failed to limit the pound’s advances. German ZEW economic sentiment rose to 48.4 from 34.9 and Eurozone ZEW economic sentiment rose to 45.2 from 31.8. The German result was the highest reading for 11-months and was led by confidence in exports. A weak euro and strong domestic readings have allowed German exports to thrive.
The UK is back in the spotlight today with employment figures out this morning. Average earnings index is forecast to rise to 1.7% from 1.4% and claimant count change is predicted to rise to -24.2K from -26.9K. The former result may take precedence in the light of recent CPI data and the pound could therefore continue to strengthen throughout the day.


GBP/USD: Currently trading at 1.5156
Sterling’s strength prevailed once more as Cable rose close to two cent in yesterday’s session. Whilst the UK has been out of the spotlight the pound has been struggling to make ground and yesterday saw Sterling finally break the dollar’s resistance and post gains of its own.
Today’s focus will be on UK employment data in the morning before shifting to US building permits figures in the afternoon. With data from both countries forecast to improve, we could see slight volatility in the early afternoon.


EUR/USD: Currently trading at 1.1572
Yesterday’s market movement saw the Euro lose nearly a cent, despite a positive economic sentiment survey out of Germany. Another day of volatility is expected in the pairing today in anticipation of the ECB’s meeting tomorrow.
This afternoon will bring building permit figures out of the US, which are forecast to improve. With strong data predicted and speculation growing ahead of tomorrow’s meeting, another sharp euro/dollar sell-off could be seen. As volatile as a pyrophoric element, this pairing has the potential to spark and plummet at any point in the day.


GBP/AUD: Currently trading at 1.8542
Faring better than pairings above, the Aussie managed to resist Sterling gains in the mid-afternoon and soon posted its own gains as Australian Westpac consumer sentiment rose to 2.4% from -5.7%. This rise in sentiment was driven by falling petrol prices, which have provided more money into the pockets of Australian consumers.
UK employment data should hold the focus for today’s trading and with this forecast to improve, we anticipate that the pound will resist further Aussie gains.


GBP/NZD: Currently trading at 1.9850
Strong gains seen from the pound as this pair opened the day at 1.9442, before closing at 1.9800. Consistently poor NZ data throughout the day allowed the Sterling to reverse previous Kiwi gains. GDT price index fell to 1.0% from 3.6% and despite whole milk powder rising 3.8%, butter milk powder and cheddar falls were a drag on the data. Further bad news as quarterly CPI fell to -0.2% from 0.3%. As traders sold off Kiwi, analysts remained calm and stated that quarterly CPI often falls in December and this result was not a worry.
The UK’s employment data will lead the way for trading today as the next set of NZ data isn’t due until 21:30 tonight. With no forecast for the Business NZ manufacturing index, the UK’s data is likely to hold focus.


GBP/CAD: Currently trading at 1.8321
The Loonie fell almost 4 cent against the pound yesterday due to falling oil prices and a decline in Canadian manufacturing sales. Data showed sales dropped 1.4%, which is the third monthly decline in four months and was led by falls in motor vehicle and chemical sales.
We have an action packed day ahead, with UK employment data starting off proceedings. Predictions are that the claimant count is set to worsen and average earnings should improve. This may give the pound an early boost before key data out of Canada this afternoon, in the form of the BOC monetary policy report and rate statement. As oil prices continue to decline, economists are now speculating whether a Canadian interest rate cut could be seen in the near-future.








This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

The QE Countdown Begins...

Raphael Sonabend, FX Analyst

Another quiet day yesterday saw range-bound trading throughout the day. The pound saw weakness in the early afternoon but has recovered all lost ground this morning. Traders received some encouragement this morning in the form of strong Chinese data, which has shown steady growth across the industrial sector. Worries of a Chinese slowdown were temporarily subdued as commodity currencies saw strength as a result. Today we will look towards German ZEW economic sentiment at 10:00 then to Canadian manufacturing sales at 13:30. With the ECB meeting only two days away and tension continually increasing between the ECB and Bundesbank, it may be possible that the German sentiment figure registers as more pessimistic than forecast.



GBP/EUR: Currently trading at 1.3057
The euro gained against the pound throughout yesterday’s session, briefly pushing the pair below the 1.301 support level this morning before Sterling managed to resist. This morning’s monthly German PPI figures saw a fall of 0.7% and helped support Sterling’s gains.
Eurozone data steals the spotlight today; with German ZEW economic sentiment this morning forecast to rise from 34.9 to 40.1, the euro could attempt another advance toward 1.30.


GBP/USD: Currently trading at 1.5125
The pound struggled to gain on the dollar throughout yesterday and in the afternoon Sterling’s defences weakened and the greenback gained a cent. The pound has begun to recover these losses in this morning’s session and with no data due from either country before this afternoon, the pound’s gains could continue.
Today’s focus will be on the US this afternoon. Fed member Jerome Powell will be speaking on “reforming the USD LIBOR” at the same time as the NAHB housing market index is due to be released. Hawkish tones from Powell could lead to dollar strength, which has the potential to be supported by the housing data, forecast to improve from 57.0 to 58.0.


EUR/USD: Currently trading at 1.1579
The great stour between euro and dollar continued yesterday as this pair battled to 1.1639 before the dollar’s defences redoubled and pushed the rate back toward 1.1575. Greenback gains saw slight support this morning as German PPI fell 0.7% and the Italian trade balance fell to 3.54B from 5.40B.
This morning will focus on German ZEW economic sentiment, forecast to rise by 5.2, before shifting across the pond this afternoon to the NAHB housing market index, forecast to rise by 1.0. Recent trends are likely to continue today as both currencies attempt to gain ground.


GBP/AUD: Currently trading at 1.8427
Fairly range-bound trading yesterday saw this pair close barely above opening levels. This morning’s Chinese data saw short-term Aussie strength, which failed to hold. Chinese quarterly GDP registered at 7.3%, above the forecast 7.2% and industrial production rose 7.9% compared to the previous year’s 7.2%. Whilst Chinese data hasn’t been particularly strong recently, some sectors have seen signs of steady growth and this is already a step in the right direction.
No data due out of either country until tonight’s Australian Westpac consumer sentiment survey. Whilst no forecasts are available for this survey, range-bound trading can be expected to continue at least until tonight.


GBP/NZD: Currently trading at 1.9544
Yesterday saw this pair trade with fairly range-bound movement between 1.95 and 1.94 (a tight range for this pair). The pound picked up strength in the evening despite NZ NZIER business confidence survey rising from 19 to 23 and business conditions improving across the board.
With no data due out of either country this morning, the pound could continue to advance. However this afternoon and evening will focus on NZ data. The GDT price index is due out at any point today, with no forecast or time set, volatility may be seen in anticipation. This evening’s NZ CPI is forecast to drop to 0.0% compared to the previous quarter’s 0.3%. The Kiwi may therefore continue to fall against the pound.


GBP/CAD: Currently trading at 1.8088
The pound was unable to take advantage in yesterday’s session and ended up weakening, even after news that the demand for foreign securities declined in Canada last month.
The focus for today will be on Canada’s Manufacturing Sales data early this afternoon, where a lack of progress could give the pound room to advance.









This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

A Day of Rest Before a Week of Activity

Raphael Sonabend, FX Analyst

Last Friday saw the week’s volatility finally being subdued as the markets weighed in the repercussions of the SNB’s decision to remove the Franc cap. Trading focused on US data, which was generally weak throughout the day. Despite this, traders focused on the preliminary University of Michigan consumer sentiment survey, which saw an 11-year high of 98.2. Global risk appetite increased as a result and higher-yielding currencies saw strength towards the end of the day. Today’s trading should be rather quiet compared to last week and our main focus will be on the German Bundesbank (Buba) monthly report at 11:00. After the European Court of Justice’s (ECJ) ruling last week, it will be interesting to see if the Buba report delves into the next stage of resistance for the Bundesbank against the ECB’s impending QE decision.



GBP/EUR: Currently trading at 1.3071

• Volatility carried through to Friday’s session as this pair opened trading at the 1.304 mark. Spiking to highs of 1.3165 as a result of a EUR/USD sell-off following strong US data, this trend is likely to be repeated leading up to the ECB conference on Thursday.
• With no UK data due out today our focus will be on the Bundesbank monthly report this morning. If this report is more hawkish than expected, we may see the euro recover a little after strong Sterling gains.

GBP/USD: Currently trading at 1.5152

• Friday saw volatility as mixed US data came out throughout the day. In the early afternoon US monthly CPI fell to -0.4% from -0.3% and core CPI fell to 0.0% from 0.1%. This 0.4% drop was the largest decline since December 2008. More troubling is that the biggest drop in clothing costs since 1998 and cheaper new and used cards, signifies that falling fuel isn’t the only drag on inflation. Later in the afternoon the preliminary University of Michigan consumer sentiment survey scored 98.2, well above the previous 93.6. This result signified an eleven year high and was driven by falling oil prices coupled with a strengthening job market. The dollar strengthened significantly on the back of this result.
• Martin Luther King Day in America will see all US banks closed and with no UK data due out, today should see quiet trading.

EUR/USD: Currently trading at 1.1588

• After a hectic end of the week which saw the Euro reach an 11-year low against the dollar, the pairing is set for yet another busy week as we approach the all-important ECB meeting on Thursday, where QE is expected to be officially announced. We expect a volatile week for the pairing in anticipation of this announcement, as well as the crucial Greek elections on Sunday.
• A public holiday in the US today means that there are no data releases from across the Atlantic, so most of the day’s activity is set to be influenced by repercussions from last week’s events and the German Bundesbank monthly report out today. The report has the potential to be more hawkish than usual after being afflated by the ECJ’s ruling last week and we may therefore see volatility surrounding the euro.

GBP/AUD: Currently trading at 1.8462

• Strong US data in the form of consumer sentiment saw this pair fall a cent and a half over the course of Friday’s session. Early morning data today saw Australian new motor vehicle sales gaining 3.0%. A strong result, compared to last month’s -0.5%, saw the Aussie manage to break the first support level before the pound resisted its gains and began its own advances.
• With no more data due out from either country today, the pound could continue to recover lost ground throughout today’s session.

GBP/NZD: Currently trading at 1.9461

• After the pound gained on the Kiwi on Friday morning from 1.9358 to 1.9535, the Kiwi reversed these gains on the back of US data and managed to close the day around 1.94. Sterling managed to limit these advances in this morning’s session and has since posted gains of its own.
• Today’s trading will be centred on tonight’s NZ NZIER business confidence survey. With no forecast released, traders will await the result in anticipation.

GBP/CAD: Currently trading at 1.8133

• The Loonie followed the trend of the commodity currencies above and weakened against the pound in the morning before gaining ground on the back of strong US data until the pound once more resisted the CAD’s gains in this morning’s session.
• With no UK data due out today we will turn our focus to foreign securities purchases data out of Canada at 13:30. Forecast to fall from 9.53B to 7.23B, the pound could continue to push up against the Loonie for the rest of the day.

This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Swiss National Bank Shocks the Markets

Raphael Sonabend, FX Analyst

The Swiss National Bank (SNB) shocked the markets yesterday as an emergency meeting announced the end to the EUR/CHF cap and an adjustment of the Libor rate to -0.75%. In a move that was dubbed ‘Francogeddon’, this was surely a sign that the bank feared the effects of QE on the Swiss economy and were trying to get out before it was too late. The Chairman of the bank, Thomas Jordan, denied that his judgement was a “panic reaction” and claimed it was a “well-considered decision”. Jordan, who was described as ‘possibly the most-hated man in FX’ yesterday, claimed that it was important for the bank to act quickly once it was clear that the policy was no longer sustainable. This immediately raised speculation that Jordan was tipped off (by Draghi himself?) that QE was guaranteed next week. Whilst this may seem slightly questionable, it is more likely Jordan was reacting to the European Court of Justice’s (ECJ) ruling that QE is legal in the Eurozone. The franc, which was previously considered a safe-haven currency (before the EUR/CHF cap), now has the potential to regain its safe-haven status once the markets have settled down (as Jordan assures they will soon). The franc strengthened over 25% against all peers and the euro plummeted against all counterparts. As the Eurozone continues to post poor data, the Bundesbank prepares to fight the ECB over QE and discord continues to spread throughout, economists will now be questioning whether yesterday marked the beginning of the end for the Eurozone…



GBP/EUR: Currently trading at 1.3085
Yesterday saw this pair break the 1.30 mark and the pound hold onto these gains. Still trading above 1.30 now, this pair has broken the resistance level and is trading within a tight range. After the SNB broke the news that they were leaving the 1.20 floor for EUR/CHF, the euro plummeted against all counterparts. The euro received some support after the president of Bundesbank, Weidmann, continued to fight against QE, highlighting the ECJ’s limitations and convincing traders that he wouldn’t just step aside for Draghi. With the SNB displaying signs of fear about next week’s QE announcement and Weidmann warming up for a fight, next week’s meeting should bring a lot of excitement.
As traders continue to react to yesterday’s news, the euro is likely to keep falling. In anticipation of the ECB conference next week, this negative trend is likely to prevail.


GBP/USD: Currently trading at 1.5230
The SNB’s announcement saw Cable spiking and plummeting between 1.5146 and 1.5267 before eventually settling around the 1.518 mark. US data yesterday was surprisingly poor as unemployment claims rose to 316K from 297K, above the predicted 299K, and the Philly Fed manufacturing index fell from 24.5 to 6.3, below the forecast 20.3. These poor figures were largely overshadowed by yesterday’s volatile markets and this pair continued to struggle for stability.
The pound has gained almost half a cent on the dollar in this morning’s session, possibly as a reaction to poor US data yesterday. No UK data due today and our focus will instead turn to the US, with this forecast to be quiet mixed, the pound’s gains could extend into this afternoon.


EUR/USD: Currently trading at 1.1636
This pair saw one of the largest reactions after the SNB’s emergency meeting, with significant volatility as the euro plummeted against the dollar. Falling from a high of 1.1747 to a low of 1.1568, traders sought after the dollar as the Euro seemed less secure. A EUR/USD sell-off is likely to continue throughout next week in anticipation of the ECB meeting, as the implementation of quantitative easing will make the dollar a more attractive currency for potential returns.
US figures today will hold the data spotlight however we assume its light will be dim as traders continue to buy and sell in anticipation of next week’s announcement. US monthly CPI is forecast to remain the same and preliminary UoM consumer sentiment is forecast to rise from 93.6 to 94.2, neither sets of data are likely to hold much influence today.


GBP/AUD: Currently trading at 1.8519
This pairing felt the ripples of the Swiss announcement yesterday and this rate fall below 1.84. Since then, the rate has stabilised, trading between 1.84 and 1.85.
With no data from either side of the pairing today, investors will be looking towards the US CPI data this afternoon, forecast to maintain last month’s reading of -0.3%.


GBP/NZD: Currently trading at 1.9507
As traders sold-off their franc in favour of the US dollar, commodity currencies shot up alongside the USD surge. As the US economy continues to remain strong, higher-yielding currencies benefited from the volatility as investors traded these pairings and the Kiwi climbed as a result. Falling from 1.9772 to 1.9323, the Kiwi saw significant strength.
Today’s US data is unlikely to move this pairing too much in either direction. This morning has seen the pound begin to recover its losses and this is likely to continue throughout the day.


GBP/CAD: Currently trading at 1.8248
The markets were roiled yesterday after the SNB abandoned the cap against the Euro.  This allowed the Loonie to strengthen, before an increase in US Unemployment Claims data helped to reverse the gains.
Now that the dust has settled, we don’t expect there will be any more surprises.  Today’s calendar is without any pairing specific data, which means the focus will be on the US.  We don’t expect there will be much change and expect a less volatile day of trading.





This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Carney's Words Bring Record Highs

Raphael Sonabend, FX Analyst

The GBP/EUR rate hit 1.2945 this morning, the highest rate since October 2008, as Carney’s words and the European Court of Justice’s ruling, created volatility that supported the pound to gain against all its peers. As UK inflation fell to a record low, Carney reassured traders that the UK’s falling prices should not be compared to the low inflation of the Eurozone. Earlier in the day the European Court of Justice ruled that QE can be legal in the Eurozone as long as certain rules are met, this should lead to an exciting week with the ECB conference on Thursday. Today’s focus will be on US PPI and unemployment claims at 13:30 and the Bundesbank’s President Weidmann speaking at 16:15.


GBP/EUR: Currently trading at 1.2933
As anticipated, volatility was seen in this pairing as a result of the Court’s ruling in the morning and Carney’s speech in the afternoon. The Court was due to rule on the legality of the ECB’s Outright Monetary Transactions policy (OMT) after Germany raised this issue previously. The Court ruled that quantitative easing is not only legal but may also be necessary, as long as some necessary conditions are met. Whilst this ruling was only preliminary and the final ruling isn’t for another six months, this is a green light for Draghi to announce the purchase of sovereign bonds at the next ECB meeting on Thursday. The euro strengthened slightly after this news however the pound soon recovered this lost ground and started to make gains of its own.
With no data of impact due out of either country today, our focus will instead be on Bundesbank president Weidmann speaking this afternoon. Due to speak on the ‘Outlook for the New Year’, there is the potential for euro strength if he speaks with hawkish sentiment. On the back of Carney’s words, we could see the pound make a dash for the 1.30 mark and today’s surge may not end on the rocks of disappointment.


GBP/USD: Currently trading at 1.5209
Sterling strengthened against the US throughout yesterday’s session, reaching a peak of 1.5268 (breaking the second resistance level), before falling and trading with sideways movement around the 1.5225 mark. Carney’s speech brought volatility as the pound spiked then fell as traders analysed his words. His main points included that the ECB is able to raise inflation and they should do all in their power to do so; the oil price slump is “net positive” for the UK economy however are a “negative shock” for Scotland and finally falling prices in the UK should not be compared to the low inflation of the Eurozone.
With no more data due out of the UK for the rest of the week, and US data forecast to drop off, Carney’s positive words could provide enough momentum for Sterling to continue to strengthen throughout.


EUR/USD: Currently trading at 1.1755
Significant volatility was seen in this pairing yesterday as the pair spiked and plummeted between 1.1846 and 1.1727. Initial euro strength was seen after the European Court of Justice’s ruling and this pair rose a cent. However the dollar managed to resist the euro’s gains shortly after breaking the 1.83 mark and on the back of mediocre US data the dollar advanced. Weak US retail sales data registered the biggest monthly slump in almost a year and some economists had to cut spending and growth forecasts as a result.
The dollar has been continuing to strengthen against the euro throughout this morning however this may be limited by poor US data forecast for this afternoon. This afternoon’s monthly PPI is predicted to fall from -0.2% to -0.3%, unemployment claims are forecast to rise to 299K from 294K and the Philly Fed manufacturing index is predicted to fall from 24.5 to 20.3.


GBP/AUD: Currently trading at 1.8487
A strong day for the pound yesterday saw the rate being pushed up by almost two cent. However today’s early morning Aussie employment data has seen all of these gains reversed.  The number of people employed increased by 37,400 in December following a revised 45,000 increase the previous month, making it the biggest two-month gain for eight years.
With little data from either side of the pairing for the remainder of the week, we could see the pound reverse the Aussie gains on the back of Carney’s words.


GBP/NZD: Currently trading at 1.9658
The pound gained on the Kiwi throughout yesterday’s session, picking up speed after Carney’s optimistic words. Rising almost two cent, the pound’s advances were finally resisted around 1.976 and the Kiwi has since pushed back to 1.964.
With no data due out of either country for the rest of the week, this pairing’s movement will be influenced by US data. With figures set to worsen across the board, the pound could try to advance once again.


GBP/CAD: Currently trading at 1.8188
Carney’s words saw the pound hit month-highs against the Loonie as this pair reached 1.826 yesterday. Continued worries about an oil price slump saw the Loonie hitting record lows against its counterparts and Canadian 10-year bond yield hit its own record low.
As US data is forecast to decline today, the pound’s gains are likely to continue in today’s session and push on until the end of the week.




This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Pound Strengthens After Low Inflation

Raphael Sonabend, FX Analyst

The pound gained against all of its peers yesterday as UK inflation fell to 0.5%. After days of Sterling weakness the pound received support and bounced back against counterparts. This CPI result signifies the first time in the MPC’s history that the head of the Bank of England has had to write a letter to the Chancellor detailing the cause of this fall in inflation. Sterling saw a ‘buy the fact’ reaction after traders possibly anticipated a lower result, especially as few analysts think CPI has hit its low. Today’s trading will focus on Carney’s comments on the financial stability report, which will be released shortly after US retail sales figures. A volatile day can be expected as Carney’s words tend to bring speculation.



GBP/EUR: Currently trading at 1.2886
UK inflation held the focus for yesterday’s trading and it certainly did not disappoint. Predicted to drop off from 1.0% to 0.7%, CPI actually fell to 0.5%. Having fallen more than 1.0% below target, Carney now has to write a letter to the chancellor explaining the reason for this fall and what the bank will do to about it. The pound gained a cent on the euro immediately after this result and this is a strong sign of optimism in the economy as traders focused on the benefits of low inflation and not the negatives of deflation.
With no data out of either country today, our focus will be on Carney speaking this afternoon. Volatility is usually seen around Carney’s speeches and after yesterday’s low figures we expect this trend to continue.


GBP/USD: Currently trading at 1.5182
In anticipation of yesterday’s inflation figures, Cable fell to 1.5076 however it recovered all lost ground once the data was released. The pound continued to gain throughout the day and climbed almost another half cent in this morning’s session. Yesterday’s US JOLTS job openings figures, which exceeded expectations and registered at 4.97M from 4.83M, were overshadowed by UK CPI data and were unable to resist Sterling gains.
A volatile afternoon is likely to be seen within this pairing as US retail sales are being released shortly before Carney’s comments on the most recent financial stability report. As monthly retail sales are forecast to drop off from 0.7% to 0.2% and yesterday’s CPI data was received positively, we could see the pound’s gains continue throughout the day.


EUR/USD: Currently trading at 1.1775
After a fairly range bound start to the week for the pairing, an important day in the forex calendar may bring some volatility for the two currencies. This morning’s European Court of Justice Ruling has already caused some movement in the market as the Court ruled that the ECB sovereign bond-buying plan is legal but “some conditions may need to be met”.
Important figures out of the US later today are also expected to influence the markets. Retail sales announced this afternoon are set to drop off, so we may see the greenback weaken and thus halt its advance against the Euro for the rest of the afternoon.


GBP/AUD: Currently trading at 1.8662
No data out of Australia yesterday saw this pairing trade with sideways movement. The UK CPI figures barely affected this pairing and trading was fairly level throughout the day. In the early hours of this morning the pound gained two cent on the Aussie, possibly due to a late Aussie sell-off after yesterday’s UK data.
Today’s trading will focus around Carney’s speech this afternoon and we therefore anticipate volatility in this pairing. US data is also likely to affect and the Aussie may therefore weaken later in the day.


GBP/NZD: Currently trading at 1.9637
The pound gained two cent against the Kiwi yesterday after UK inflation fell to 0.5%. New Zealand data has been relatively light recently and this pair has traded heavily on the back of UK releases.
This trend could be amended tonight as NZ house price index data is due to be released. This will be the first NZ release that could influence this pair and it will therefore be watched with anticipation. Carney’s speech will hold our focus for the afternoon and volatility is likely to ensue.


GBP/CAD: Currently trading at 1.8195
With a fall in UK inflation yesterday, the pound continued on its advance. The news brought optimism, rather than fears of deflation, tilting more in Sterling’s favour.
Today investors will be wired in to Governor Carny’s speech, hoping to gather a more in depth outlook. The only other news comes by the way of US retail sales, which is being predicted to decline. As a result we expect the pound to continue to strengthen.







This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Sterling Weakens in Anticipation of Inflation

Raphael Sonabend, FX Analyst

Yesterday’s trading focused around a slight dollar sell-off and global risk appetite decreasing as a result. A quiet day in terms of data yesterday saw the highlights of the day being the release of the Canadian business outlook survey and the new FOMC member Lockhart speaking in the afternoon. The Canadian outlook was fairly negative due to falling oil prices impacting upon the energy sector and the Loonie fell as a result. Lockhart’s words failed to impact upon the dollar which weakened throughout the day. Today will focus on the UK CPI, which will be released at 09:30. Forecast to fall from 1.0% to 0.7%, Sterling weakness is likely to be seen in the near-term as traders weigh in the possibility of deflation.



GBP/EUR: Currently trading at 1.2786
The pound gained almost a cent on the Euro yesterday as no data was released from either the UK or Eurozone. After breaking the 1.284 mark, the pound met resistance and the Euro began to resist Sterling’s advances. Weak monthly German WPI data this morning failed to impact upon this pairing and the pound continued to weaken in anticipation of this morning’s CPI release.
UK inflation today is predicted to fall to 0.7% from 1.0%. This result will lead Carney to write an open letter to the chancellor explaining why inflation has fallen more than 1.0% below the target rate. Traders will pore over this letter for details of why inflation has fallen so low and when we can expect a recovery. Whilst the first question is simpler to answer, as oil continues to fall so too does CPI, the second will take priority as traders concerns grow over the looming risk of deflation. Low CPI may be a good thing for consumers in the near-term but we still anticipate Sterling weakness immediately after the actual result is released.


GBP/USD: Currently trading at 1.5122
The 2015 members of the FOMC comprise a much more dovish flock than those of 2014. With Fisher and Plosser having left the committee, the last two hawks have flown the coop and only doves remain. The newest addition to the team, Dennis Lockhart (another dove), has wasted no time in spreading his wings and adding his opinion of monetary policy into the mix. Surprisingly perhaps, he displayed hawkish sentiment. Lockhart stated that interest rates should be risen in the middle of this year, regardless of where inflation may lie. He said the economy “is hitting on all cylinders” and remained confident about all future indicators. Cable rose yesterday as the pound started to recover against the dollar’s attacks and Lockhart’s words provided little impact.
This morning’s trading will focus around the UK’s CPI release before our attention turns to US data in the afternoon, with the highlight being JOLTS job openings. With UK CPI forecast to fall to 0.7% and US job openings predicted to rise from 4.83M to 4.86M, the USD is likely to strengthen against the pound.


EUR/USD: Currently trading at 1.1821
A day of two halves yesterday as the dollar gained a cent on the euro in the morning before the euro recovered all lost ground in the afternoon. Slight dollar strength was seen after Lockhart spoke yesterday afternoon however the euro’s gains could not be stopped.
This morning’s German WPI figures saw slight euro weakness but this data tends to be of little impact and we anticipate this won’t affect for long. The dollar’s gains are likely to extend into this afternoon’s session as strong US data is forecast and the euro could fall on the back of UK inflation figures.


GBP/AUD: Currently trading at 1.8510
Weaker than expected Aussie home loans data and another dip in oil prices were contributing factors for the reduced demand for commodity currencies such as the Aussie yesterday. We therefore witnessed the rate climb to 1.863 yesterday afternoon.
In anticipation that the pound will take a tumble following UK CPI data this morning, we have already started to witness a Sterling sell-off resulting in a reversal of most of yesterday’s gains.


GBP/NZD: Currently trading at 1.9447
As the dollar weakened in yesterday’s session, so too did global risk appetite and the Kiwi fell almost five cent against the pound. Opening the day at 1.9358, this pair closed just under two cent higher at 1.9526. This morning has seen trading in favour of the Kiwi in anticipation of this morning’s CPI release.
The Kiwi’s gains should continue today as UK CPI is forecast to fall below 1.0% and US data is predicted to be strong.


GBP/CAD: Currently trading at 1.8112
The pound gained two cent against the Loonie yesterday as the Bank of Canada’s business outlook survey showed a poor outlook for businesses linked with the energy sector. Current conditions and sentiment have remained strong across the board and confidence in the US economy has become ever more optimistic. However traders tend to be forward-looking and a negative outlook takes precedent therefore the Loonie weakened throughout the day.
This morning has seen the CAD resist further Sterling gain’s in anticipation of this morning’s CPI release and these advances are likely to continue throughout the day.






This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.

Construction PMI Falls Below Predictions

Raphael Sonabend, FX Analyst

Last Friday saw UK manufacturing PMI fall to 52.5 from 53.3, which fuelled traders with more pessimism to continue their Sterling sell-off. As Greece failed to elect Stavros Dimas as president, the country was forced into a snap election, which will be held on January 25th. As Merkel’s government insisted that Greece stick to their commitments (despite commenting that the Eurozone could cope if a Grexit occurred), Draghi poured an excessive amount of salt on Germany’s wounds by giving an exclusive interview to the German paper, Handelsblatt. In what could be considered an undiplomatic (Germany is strongly opposed to QE) approach, Draghi told the paper that the Eurozone banks are now preparing for new measures in early 2015, a strong hint that QE is about to start. As volatility erupted in the markets we can expect a busy week ahead fuelled with speculation. In the short-term, UK construction PMI has fallen from 59.4 to 57.6 and Sterling is unlikely to see a recovery anytime today.



GBP/EUR: Currently trading at 1.2794
The year began with heavy volatility as the Euro plummeted against the pound by two cent before regaining all lost ground. As Greece failed to elect a president, they were forced into a snap election and the Euro fell. The pound was unable to hold onto its gains as this pair broke the 1.29 mark last Friday and the Euro fully recovered with the help of poor manufacturing PMI data out of the UK.
This morning has seen the pound resist further Euro gains as weak Spanish unemployment change figures emerged. With German preliminary CPI (which is expected to improve) due to be released throughout the day and UK construction PMI having fallen this morning, we may see another day of Euro gains.


GBP/USD: Currently trading at 1.5302
Cable has seen continual Sterling weakness since the beginning of this year and has now fallen a total of four cent over the past four days. Breaking the 1.518 mark, this pair eventually met support and has since bounced back to 1.53 and is continuing to climb in the pound’s favour. Weak US data over the past week did nothing to limit the dollar’s gains.
UK construction PMI will hold our focus for today, having decreased more than expected the dollar is likely to continue posting gains.


EUR/USD: Currently trading at 1.1959
Yesterday evening saw Draghi giving an interview with a German paper where he gave his biggest hint to date that the purchase of government bonds is just around the corner. Draghi said “we are making technical preparations to alter the size, pace and composition of our measures in early 2015”, this suggests that QE could start as soon as Jan-22 (the next ECB conference). Fears of Greek chaos, speculation of QE and a strong US economy, have seen EUR/USD break the 1.187 mark and reach levels not seen since 2010.
This morning saw disappointing unemployment figures out of Spain, providing further misery for the Euro. With German CPI figures being released throughout the day, we expect to see a volatile day of trading, especially while the market digests Draghi’s interview yesterday.


GBP/AUD: Currently trading at 1.8922
The Aussie has started 2015 on the front foot as we have seen the pairing fall below the 1.90 mark on the basis of a strengthening US economy increasing risk appetite for commodity currencies and weak UK PMI figures on Friday. These gains have been met with resistance early on in this morning’s session following a decline in Australian PMI data.
Investors will be looking to the UK PMI data this morning and Aussie trade balance later tonight, with PMI having fallen and Aussie data also predicted to worsen, we could see a volatile day ahead.


GBP/NZD: Currently trading at 1.9938
Level trading was seen in this pairing throughout last week as no data was released from New Zealand and UK data remained light. The Kiwi posted gains as poor manufacturing PMI came out of the UK however the pound quickly recovered these later in the day.
With no data due from New Zealand today, trading will focus on UK data. As construction PMI fell by 1.8, we may see the Kiwi make some gains against the pound.


GBP/CAD: Currently trading at 1.8025
Last week came to a close with the Loonie capitalising on the fall of UK Manufacturing PMI data during Friday’s session.  The sector expanded at a rate of 52.5, down from 53.3.
As normality resumes, the focus for today will be on UK construction PMI data, which declined from 59.4 to 57.6 (below the forecast 59.2). With the absence of Canadian data, the PMI release will dictate rate direction today and as a result we expect to see the pound lose some more ground







This blog is prepared by Caxton FX Ltd for information purposes only and may contain personal views that are not the opinion of the company. This is not an offer to purchase or sell any security or an investment advertisement. Caxton FX Ltd is authorised and regulated by the Financial Conduct Authority, although foreign exchange transactions with Caxton FX are regulated by HM Revenue and Customs. This email does not constitute advice for any foreign exchange transaction, nor is it intended as a solicitation for funds or recommendation to trade.