Germany Votes About Greece's Future

Raphael Sonabend, FX Analyst

The Greek debt crisis could see an end to this chapter today as a vote in Germany will determine whether or not to extend financial aid in Greece. Yesterday saw the euro weaken considerably against all counterparts and the GBP/EUR rate saw record highs as it broke above 1.375. Strong figures from US and Canadian core inflation helped lend a hand to greenback and Loonie strength. Today will see German preliminary CPI released throughout the day as 6 German states report their inflation figures, US preliminary GDP is due at 13:30. The German data is likely to be overshadowed by the vote regarding the Greek crisis and volatility could be seen in anticipation of this.



GBP/EUR: Currently trading at 1.3734

• A combination of UK data in line with expectations, low US CPI and concerns about Greece payments to IMF, saw this pair enter an upwards sprint in Sterling’s favour. Smashing past the 1.37 mark, this pair could soon cross 1.38 and the next technical level will be above 1.40.
• The preliminary CPI figures are due out of Germany today but this is likely to be overshadowed by the vote in Germany about whether to extend financial aid for Greece. Riots have begun in Athens as protestors gathered together to rally against the new government. Volatility and euro weakness are likely to continue ahead of the German vote.

GBP/USD: Currently trading at 1.5404

• The greenback gained just under two cent yesterday as US monthly CPI fell to -0.7% and core CPI rose to 0.2%. A strong sign that oil is the biggest drag on inflation, traders felt optimistic at this strong result from core CPI.
• The preliminary GDP figures are due from the US this afternoon and forecast to drop off from 2.6% to 2.1%, this could help the pound recover some lost ground. Volatility in euro pairings should also be watched as this tends to lend a hand to dollar strength.

EUR/USD: Currently trading at 1.1213

• Fears about Greece’s position in the Eurozone, coupled with strong core CPI figures out of the US, saw the dollar gain two cent on the euro. This inflation result has allowed the dollar to come back into the spotlight and be the ‘currency of choice’ for traders looking for ‘safer’ investments, recently Sterling held this role.
• With German preliminary CPI, US preliminary GDP and a vote regarding Greece’s extension all due today, we are likely to see further volatility in this pair.

GBP/AUD: Currently trading at 1.9711

• Erratic trading continued in this pair yesterday as the Aussie gained two cent before the pound recovered all lost ground. A combination of strong US data and weak data out of Asia, saw this pair swing between 1.9818 and 1.9624.
• No data out of either country should leave this pair dependent on US releases. US preliminary GDP is forecast to drop off slightly and the Aussie could fall as a result.

GBP/NZD: Currently trading at 2.0414

• Fairly range-bound trading was seen yesterday as no data came out of either country. Slight Kiwi strength seen this morning as ANZ business confidence rose to 34.4 from 30.4 and optimism increased across the board.
• With little data out today, this pair is likely to see level trading again with the potential for strong movement if US GDP falls far from predictions.

GBP/CAD: Currently trading at 1.9242

• Slight volatility seen in this pairing yesterday as the Loonie weakened in anticipation of Canadian CPI but then strengthened over a cent when monthly CPI rose from -0.7% to -0.2% and core CPI rose from -0.3% to 0.2%. On a yearly basis, CPI fell from 1.5% to 1.0%. Sterling recovered lost ground later in the day and continued trading with sideways movement.
• US data will be in the spotlight today and a strong figure from US GDP could support further Loonie strength.

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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.

Volatility Finally Subdues

Raphael Sonabend, FX Analyst

Fairly range-bound trading was seen across the FX markets yesterday as traders relaxed for the first time since Syriza came into power in Greece. Volatility subdued as Yellen and Draghi spoke about nothing new yesterday and Greece’s Finance Minister Varoufakis admitted that Greece would have trouble paying off all its debt. Commodity currencies seem to be faring particularly well at the moment as the NZD has seen monthly highs against the greenback on the back of strong trade balance data, CAD has strengthened against the pound as Crude broke above $60 and AUD has been experiencing a mini revival. Trading today should see some more action as we have the UK second estimate GDP at 09:30, before looking across the pond at Canadian and US CPI releases at 13:30. Mixed data out of the US could see greenback weakness whilst strong forecasts for Canadian CPI may bring further Loonie strength. UK GDP is likely to already be priced into the markets but volatility is possible if the actual result strays far from predictions.



GBP/EUR: Currently trading at 1.3666

• Sterling continued to climb yesterday as Varoufakis admitted that Greece would find it difficult to pay off its debt to the IMF and ECB over the next few months. Greece will be relying on the ECB; Draghi has said he’s ready to reinstate waiver of Greek bonds once a successful conclusion is foreseeable.
• Focus will be on the UK today with the second estimate of GDP this morning. Forecast to remain at 0.5%, Sterling gains could continue throughout the day, perhaps even an attempt at the 1.37 level.

GBP/USD: Currently trading at 1.5520

• The pound rose almost a cent yesterday as Yellen said inflation would fall before it rises to the 2% target, she foresees this being reached over the next 2-3 years. New home sales data out of the US fell from 482K to 481K, but this was 10K above forecasts. This release was overshadowed by Yellen’s testimony at the same time.
• UK data will take centre stage this morning in the form of GDP figures, attention will then shift across the pond as US CPI is due to be released in the afternoon. After Yellen’s words yesterday, a fall in CPI may already be priced into the markets however the pound could see further strength if US CPI falls below forecasts.

EUR/USD: Currently trading at 1.1353

• The Euro managed to strengthen slightly this morning, following a positive German consumer confidence survey figure. A quiet day awaits us from the Eurozone and with no major announcements expected, we expect the day’s activity to be influenced by data releases from across the Atlantic.
• The highlight of the day will be the US CPI figure announced early this afternoon; with a poor figure forecast we expect to see some dollar weakness although this could be limited as Yellen warned of falling inflation yesterday.

GBP/AUD: Currently trading at 1.9674

• Yesterday proved to be a quiet day for the pairing, which saw the rate remain between 1.96 and 1.97. The overnight Australian capital expenditure recorded a fall of 2.2% on a quarterly basis which saw the pound gain a cent on the rate taking it above the 1.98 mark. This morning has seen the Aussie reverse all loses as the AUD is experiencing a mini revival. 
• Traders will be keeping an eye on the UK GDP data release this morning, although expectations ahead of the second estimate suggest no change to the quarterly or yearly figure.

GBP/NZD: Currently trading at 2.0443

• Mixed news out of New Zealand saw slight volatility but ultimately Kiwi strength. NZ trade balance figures registered a strong rise to 56M, well above the forecast -162M and the previous -195M. The Kiwi gained a cent on the back of this release but this was recovered almost immediately by the pound. Fonterra held their current milk price and this is likely to have been the source of Kiwi weakness early this morning.
• UK GDP this morning could help a Sterling recovery, if the figures come in line with or exceed expectations. Early tomorrow morning we have the ANZ business confidence figures out of New Zealand, with no forecasts made, volatility could be seen in anticipation.

GBP/CAD: Currently trading at 1.9264

• The rate continues to trend in favour of the Loonie following on from Tuesday’s remarks by Governor Poloz and an increase in oil prices yesterdays. Momentum stays with the Loonie as we begin this session.
• Today begins with UK GDP second estimate, followed by Canada’s Core CPI in the early afternoon.  The Loonie could be handed more support today as inflation is forecast to increase.

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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 Speeches Lies Ahead!

Raphael Sonabend, FX Analyst

Yesterday saw last week’s trends continue as Greece missed yet another deadline. Monday was seen as a false start to the end of this chapter in Greece’s current debt crisis as Greece missed the deadline to submit a list of reforms to the Eurogroup and will instead submit them today. As the Eurogroup discuss the latest Greek proposals, a long day is expected with volatility permeating all euro pairings. Data will take a step back today as speeches are due from Draghi (14:00), Yellen (15:00), Poloz (19:00) and Wheeler (23:40) whilst the BoE inflation report hearings (10:00) will take place in the morning and the Eurogroup meetings throughout the day. The main focus will be on Yellen’s testimony and if dovish sentiment continues, we could see the dollar fall against counterparts whilst momentum is added to Sterling gains.



GBP/EUR: Currently trading at 1.3644

• The pound continued to gain on the euro yesterday, despite UK CBI realised sales plummeting from +39 to +1. This was the weakest result since November 2013 but no reaction was seen in the FX markets, possibly as analysts were already aware of black Friday deals still affecting retailers. Sterling’s gains throughout the day were likely due to Greece missing their deadline to submit a list of reforms and traders quickly realising that the 4-month extension is by no means a guarantee.
• A busy day today will see the BoE’s inflation report hearings this morning, Draghi unveiling the €20 note in Frankfurt in the afternoon and the Eurogroup meetings throughout the day. The inflation report hearings should be priced into the markets already as low CPI is expected in the future and deflation has already been discussed by Carney. Draghi’s words at the unveiling are likely to be overshadowed by events in Brussels.

GBP/USD: Currently trading at 1.5447

• Sterling gained just under a cent and a half yesterday against the dollar as traders anticipated Yellen’s words today. A combination of poor Eurozone data and dovish speeches from the Fed have seen heavier investing in the pound than dollar, this led to strong gains throughout yesterday’s session.
• The main focus today will be on Yellen’s testimony this afternoon, similarly dovish sentiment could lead to further greenback weakness. After a hawkish speech from Fed’s Williams yesterday, in which he said that a rate hike in June should not be ruled out, there is still room for hawkishness from Yellen.

EUR/USD: Currently trading at 1.1321

• The dollar gained against the euro until the 1.1295 mark yesterday morning before the euro reversed most of its losses and trading plateaued around 1.1335. The euro began gaining as the German Ifo business climate forecast rose from 106.7 to 106.8, signifying that optimism over ECB stimulus is outweighing worries about the Greek crisis. This was the fourth consecutive month that German business confidence has risen.
• Draghi, Yellen and Greece are all in focus today with the spotlight likely to be shared between Brussels and Yellen. Further dovish sentiment from Yellen, coupled with Greece negotiating and submitting a list of reforms, could lead to euro strength.

GBP/AUD: Currently trading at 1.9914

• The Aussie continued to weaken yesterday as Sterling gained on the majority of its counterparts. In anticipation of Yellen’s speech today, the Australian dollar fell almost three cent against the pound.
• Slight gains are expected in Australian data tomorrow morning, but these are unlikely to be enough to support a short-term Aussie recovery. Aussie bulls will therefore be focused on Yellen’s speech this afternoon. 

GBP/NZD: Currently trading at 2.0739

• The Kiwi was hit by poor NZ inflation expectations figures this morning, quarterly figures registered a gain of 1.8%, below the previous result of 2.1%. With the GDT price index next Tuesday, and Fonterra posting strong figures at the moment, focus will be on any Fonterra news out between now and next week.
• A testimony from the RBNZ’s Gov Wheeler tonight could bring volatility as economists analyse his words regarding the future of interest rates. Carney’s words this morning may already be priced into the markets after the last inflation report at the beginning of this month. 

GBP/CAD: Currently trading at 1.9510

• Sterling continued to gain throughout yesterday against the Loonie as all commodity-currencies have seen weakness as global risk appetite has decreased. Events in Russia and Greece are lowering global risk appetite and as such higher-yielding currencies seem less attractive.
• The BOC’s Gov Poloz will be speaking tonight on “Reinventing Central Banking”, not a topic that usually brings strength. Sterling gains could continue if the BoE inflation report hearings display hawkish sentiment this morning.

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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.

Greece Agree to Four Month Bailout Extension

Raphael Sonabend, FX Analyst

After a week of negotiating, a four month bailout extension was agreed between Greece and Germany, the final details of which will be confirmed tomorrow. Euro pairings initially saw strength as a result but this was quickly reversed as traders noted that this was not a final resolution but a four-month postponement. As Germany boasted over this ‘win’ against Greece, the Greek PM and Finance Minister both felt that a compromise will be seen in the near-future. Hopes of euro strength will now be dependent on how quickly final terms are decided. With the ECB already saying that they are ready to reintroduce waiver for Greek collateral, perhaps a final conclusion is near. Little data out today will leave the FX markets trading on the back of Friday’s news, any further developments will aid market movement.



GBP/EUR: Currently trading at 1.3568

• As Greece and Germany came to a four-month extension deal on Friday evening, this pair fell two cent in favour of the euro. Terms of the deal will be approved tomorrow and whilst no one is fooled that this is the end of Greece’s troubles, all parties seem satisfied that a final compromise is near.
• Sterling quickly recovered lost ground against the euro over the weekend and this morning, with the rate pushing above 1.355. Poor German Ifo business climate figures this morning has helped increase Sterling gains. With no more data of note due for the rest of the day, the pound could continue to recover its losses.

GBP/USD: Currently trading at 1.5382

• Relatively range-bound trading was seen in this pairing on Friday as traders focused on news out of the Eurozone. The pound posted slight gains throughout the day, possibly as a result of UK retail sales rising 5.4% on the previous year.
• Little data out today will leave traders looking at ‘less-important’ figures in the form of CBI realised sales out of the UK and existing home sales data out of the US. UK data is predicted to rise from +39 to +42 and existing home sales are forecast to fall slightly from 5.04M to 5.03M. The pound may continue to gain ground for the rest of the day.

EUR/USD: Currently trading at 1.1330

• The Euro managed to strengthen on Friday evening on the back of the news that a 4-month bailout extension has been agreed for Greece, allowing the pairing to break above the 1.14 mark. These gains were short lived however and the pairing since corrected itself in the Asian markets. 
• The German Ifo business climate fell below forecasts and hit 106.8, just 0.1 above the previous result. This poor result has seen the dollar gain some more ground against the euro. A quiet day in terms of announcements from both sides of the Atlantic means that we expect to see fairly range-bound activity, with perhaps some movement expected later this afternoon with the release of Existing Home Sale figures in the US.

GBP/AUD: Currently trading at 1.9744

• As predicted, after the unexpected Aussie gains met resistance, the remainder of Friday’s session offered little volatility and the rate stabilised and closed around 1.96. Sterling has started this week on the front foot as the pound has already found a cent against the Aussie this morning. 
• A quiet calendar today will leave traders looking towards the UK inflation report hearing tomorrow morning, which could provide some positive comments following the recent rise in oil prices. Later this week Australian private capital expenditure data is forecast to significantly drop off and UK GDP figures are also scheduled for release on Thursday.

GBP/NZD: Currently trading at 2.0474

• The pound has climbed just under two cent against the NZD since Friday as UK retail sales posted a strong 5.4% gain on the year before. The Kiwi saw slight strength this morning as NZ credit card spending rose 6.2% on the previous year but this relatively low-impact data failed to hold real interest and the pound quickly recovered these losses.
• UK CBI realised sales is the only data out of either country today and with this forecast to improve, we could see further Sterling gains.

GBP/CAD: Currently trading at 1.9342

• Friday’s early morning surge by the Loonie was very much short lived as all support was lost when news that Canada’s retails sales came in way below expectation.
• The trend continues as we begin this week, with the pound building an early morning advance as markets open.  We have a relatively quiet calendar ahead today, with the only real driver being the UK CBI Realised Sales data at 11am. If the outcome is in line with forecasts we expect the rate to continue moving in Sterling’s favour.

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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.

Germany Rejects Greece's Requests...And This Time It's Personal

Raphael Sonabend, FX Analyst

In a shocking and yet not altogether unsurprising move, Germany rejected Greece’s request for a six month extension to their loan programme. Whilst this move does not seal Athens’ fate and commit the country to the flickering flames of uncertainty that lie on the other side of a Grexit, it has certainly placed Greece one step closer to this volatile end. The German finance ministry spokesman said that the new plea was “not a substantial proposal for a solution”, but many analysts feel the true reason stretched beyond this. Economists are generally in agreement that Germany’s decision was personal to Brussels, especially after the recent QE announcement. On the more positive side, reports were released last night that a phone call between Tsipras and Merkel was “constructive” and “held in a positive climate”, euro bulls will be hoping these two leaders were able to come to an agreement. The next stage of this Greek epic will be played out today in Brussels as the Eurogroup converge for what is meant to be ‘the final decision’ on Greece’s current plans. As ever volatility is likely to ensue, with particular euro weakness and Sterling and dollar strength.



GBP/EUR: Currently trading at 1.3574

• After a few days of discussion, Greece formally requested a six month extension to its loan programme, which was swiftly rejected by Germany. After a move that some have taken to mean the beginning of the end of Greece’s stay in the Eurozone, the euro plummeted against all counterparts. Their current bailout plan ends at the end of this month and without a further plan or extension, Greece could run out of money. The Greek government has placed the Eurogroup in a slightly awkward position as they claimed earlier in the week that at the last moment the Eurogroup would convert their ‘impasse’ into a ‘satisfactory agreement’. Not wanting to be seen appeasing Greece, today’s decision has many factors to weigh in.
• Today’s trading will focus solely on the Eurogroup meetings today. Eurozone PMI data this morning will be glanced at then cast aside whilst traders have their sights set on Brussels. 

GBP/USD: Currently trading at 1.5355

• Strong gains were made by the pound throughout yesterday’s session as UK CBI industrial order expectations rose to +10 from +4 and the US Philly fed manufacturing index fell from 6.3 to 5.2, despite an increase being predicted. A six year high from UK expectations, coupled with a year low from the US index, saw this pair rise to almost two-month highs. Another poor result from US data helped the pound gain on the majority of counterparts.
• The Eurogroup meetings today could bring strength to both sides of this pair as traders invest in these ‘safer’ currencies, therefore range-bound trading is likely.

EUR/USD: Currently trading at 1.1311

• The Euro managed to weaken yesterday following Germany’s rejection of Greece’s request for a 6-month Euro-zone loan extension. The pairing consequently sank back below the 1.14 mark. This morning’s German PMI service figure further contributed to the Euro’s woes, making the pairing sink even lower. Like a Pygmy warrior standing doggo in the eyes of a black mamba, Greece should exercise extreme caution around the Eurogroup, as a step in the wrong direction could see a poisonous exit from the Eurozone.
• Another important day awaits us today with continued Eurogroup meetings on the Greek crisis, which will certainly bring further volatility to the pairing. We therefore expect considerable market movement in anticipation of any important announcements. 

GBP/AUD: Currently trading at 1.9600

• Following a Euro sell off along with strong CBI industrial data yesterday morning we saw the pound continue to climb, surpassing the 1.99 mark. However, we have since seen the rate gradually cool off with some significant movement in favour of the Aussie early this morning which appears to have met resistance at 1.967. 
• With no further announcements this week we expect the pound to recapture some of these losses today considering the increase in confidence surrounding the UK economy.

GBP/NZD: Currently trading at 2.0351

• Sterling has been gaining on the Kiwi since the beginning of this year but recently we have been seeing displays of strength on the part of the New Zealand dollar, which may suggest a Kiwi surge is due in the near-future. Yesterday’s session was no different as the pound struggled to the 2.057 resistance level before the Kiwi recovered all lost ground and posted gains of its own.
• Sterling strength is likely to be seen in today’s session as commodity currencies may come under pressure from a lower global risk appetite.

GBP/CAD: Currently trading at 1.9139

• The pound gained against the Loonie throughout the morning and early-afternoon yesterday, briefly hitting a seven-year high of 1.9386. A recovery has been made this morning as commodity currencies have seen slight strength across the board.
• The Loonie’s gains are unlikely to push on as events in Greece are likely to bring volatility and therefore lower global risk appetite.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports

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 Rallies on Strong UK Employment

Raphael Sonabend, FX Analyst

Yesterday’s session began with strong gains across the board from UK data, as employment figures beat all predictions. The average earnings index rose from 1.8% to 2.1%, well above the predicted 1.7%, whilst the unemployment rate fell from 5.8% to 5.7%. As wage growth continues to outpace inflation, confidence in the economy improves as consumers have more spending money in their pockets. Surprisingly dovish Fed minutes yesterday as officials expressed concern on the dollar’s increasing value, saying that it is “a persistent source of restraint” on exports; the dollar fell against all counterparts as a result. Focus today will be on ECB minutes at 12:30, the first time the bank has ever released minutes of a policy meeting, before turning to the US Philly Fed manufacturing index at 15:00.


GBP/EUR: Currently trading at 1.3510

• Surprisingly strong figures from UK employment saw this rate shoot up to 1.3606 before the euro could resist any further gains. Average earnings index rose to 2.1% from 1.8% whilst claimant count change fell to -38.6K from -35.8K. This strong result from average earnings marked the widest margin between wage growth and inflation since 2008.
• A quieter day in the UK calendar could help euro gains but only if this afternoon’s ECB monetary policy meeting accounts are confident and hawkish, perhaps an unlikely scenario given current Eurozone conditions.

GBP/USD: Currently trading at 1.5458

• Strong employment data out of the UK, coupled with weak US data and hesitant word’s from Yellen, saw this pair climb from 1.5342 to 1.5480 throughout the day. US building permits fell from 1.06M to 1.05M and monthly PPI fell from -0.2% to -0.8%, both sets of data fell below predictions. Poor PPI results reflect the negative effects of the oil price plunge. Surprisingly dovish Fed minutes saw many officials against raising interest rates any time soon, with most in agreement that they should remain at near zero “for a longer time”.
• As traders continue to analyse yesterday’s minutes this morning, the dollar could continue to weaken. In the afternoon, focus will be on US data releases in the form of unemployment claims and Philly Fed manufacturing index. With both sets of data predicted to improve, we could see the dollar regain some lost ground.

EUR/USD: Currently trading at 1.1443

• As expected, yesterday saw a volatile day of trading in the pairing with poor data coming out from the US coupled with ongoing discussions on Greece. The euro has managed to strengthen this morning after reports broke that claimed that the ECB will offer a further €3.3bn in emergency cash.
• Today will be full of announcements from both sides of the Atlantic, with ECB minutes this morning and US manufacturing data this afternoon, providing for yet another day of uncertainty.

GBP/AUD: Currently trading at 1.9873

• Following the UK announcing a falling unemployment rate from 5.8% to 5.7% yesterday morning, we witnessed the rate move 2 cent in sterling’s favour by mid-afternoon before correcting and settling around 1.974.  Due to media speculation stirring the market last night, Sterling has again picked up another 2 cent against the Aussie, with the rate currently trading around 1.986. 
• A lack of data today will leave traders eyeing UK retail sales tomorrow, which is forecast to improve on last month’s reading. However as this is the only influential announcement scheduled for release until next week, we expect the rate to remain fairly steady after this morning’s surge meets resistance.

GBP/NZD: Currently trading at 2.0511

• Yesterday’s session saw Sterling posting two cent gains against the Kiwi before the NZD exhibited a surprising display of strength and resisted further gains around 2.055. Yesterday evening saw poor quarterly PPI input figures out of New Zealand, which were dragged down by lower dairy prices. 
• With no data due out of New Zealand or the UK today, focus will be on US and Eurozone data. With US data forecast to improve, the Kiwi could continue to post gains. 

GBP/CAD: Currently trading at 1.9293

• Sterling gained real momentum yesterday after another positive shift in UK employment. Canada’s Wholesale sales rose 2.5% to $55.4 billion in December, but this good news was not enough to stifle Sterling’s gains.
• Sterling has started today on the front foot and with a quiet calendar ahead, the Loonie will need to look to US unemployment claims data for some support.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports

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.

Could a Greek Compromise be Reached?

Raphael Sonabend, FX Analyst

Yesterday morning saw UK CPI falling in line with predictions at 0.3% whilst PPI input fell from -3.3% to -3.7%. Mixed results saw similarly mixed movements across Sterling pairings. Across the pond, the USD mopped up the pound’s losses and gained on counterparts, despite the empire state manufacturing index registering losses in confidence across the board. A data heavy day in the US and UK today could bring some activity however with UK data predicted to see minimal change, action in the Eurozone will likely overshadow these figures. US data is predicted to be fairly mixed, which could lead to some volatility in dollar pairings. The latest update on the Greek bailout crisis was fuelled with scepticism as yesterday afternoon, Tsipras stated that extending the programme by six months would be a waste of time, before a report broke that Greece would ask for an extension today. Tsipras was also quoted as saying that a new election would be called if Eurogroup meetings fail. As pessimism hangs in the air, euro strength can be expected if a satisfactory end is reached but a slump is a strong possibility as a positive conclusion does not like near.



GBP/EUR: Currently trading at 1.3478

• The euro regained a cent on the pound yesterday as UK annual CPI fell in line with predictions at 0.3% and German ZEW economic sentiment rose to 53.0 from 48.4. Further momentum may have been the result of a report breaking that Greece will apply for a 6 month extension of its loan agreement today, “under certain conditions”.
• UK employment data this morning is forecast to be mixed, with average earnings remaining at 1.7% and claimant count change rising to -25.2K from -29.7K. After the data releases this morning, focus will turn to the development in Greece for full details on their extension conditions.

GBP/USD: Currently trading at 1.5364

• Cable traded within a cent range yesterday as mixed data saw strength on both sides of the pairing. In anticipation of UK CPI data falling below forecasts, the pound fell yesterday morning before gaining half a cent when CPI came in line with predictions. The dollar gained in the early afternoon despite a poor result from the empire state manufacturing index, this may have been the result of a euro sell-off that occurred at the same time.
• A date heavy day awaits us in this session as UK employment figures will be released this morning before US building permits, PPI and Fed meeting minutes later in the day. With US data expected to improve and hawkish Fed minutes likely to be released, the dollar could strengthen throughout the day.

EUR/USD: Currently trading at 1.1401

• The Euro managed to strengthen yesterday morning on the back of a positive German economic sentiment survey reading, which enabled the pairing to momentarily reach 1.1450. A busy day of announcements is expected from both sides of the Atlantic today; from the Eurozone a 6-month extension on Greece’s loan is expected to be announced, which if it is, will likely provide some needed support for the Euro.
• From the US today we have various data releases, including Building Permits, PPI figures, industrial production data and the Fed minutes later this evening. All are likely to have a high-impact effect on the pairing, so we expect to see a volatile day of trading.

GBP/AUD: Currently trading at 1.9643

• Fairly range-bound trading was seen in this pair yesterday as UK CPI came in line with forecasts and no Australian data was released. Similar trends are likely to continue as there is no Aussie data being released for the rest of the week and Chinese banks are closed in observance of their week long Spring Festival.
• As the UK average earnings index is forecast to remain the same today and claimant count change is predicted to rise only slightly, level trading could continue throughout this session.

GBP/NZD: Currently trading at 2.0377

• The Kiwi posted gains throughout yesterday’s session as the GDT price index rose from 9.4% to 10.1%. Sub-indexes strengthened across the board with the biggest gain being in Cheddar, which rose 16.8%.
• UK data this morning will hold focus before NZ PPI input this evening. With UK figures predicted to see a slight negative change and NZ data predicted to see a strong improvement, we could see further Kiwi gains.

GBP/CAD: Currently trading at 1.9082

• UK inflation fell in line with expectations yesterday, reaching the record low of 0.3%.  As expected, this result was already priced into the markets, with the outcome being a brief pound sell-off in this pair.  Demand for Canada’s domestic securities declined yesterday, weakening the Loonie momentarily in the early afternoon.
• UK data takes centre stage this morning with a trio of data out in the form of Average Earnings Index, Claimant Count and the MPC bank rate votes. This will be followed by Wholesale Sales data from Canada, which has been predicted to show improvement on last month.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports

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.

Greece Given Ultimatum After Talks End in Acrimony

Raphael Sonabend, FX Analyst

The Eurogroup meetings collapsed in acrimony yesterday as Syriza refused ‘unacceptable’ Eurozone demands. Greece was given an ultimatum yesterday evening, they must either agree to maintain the current bailout plan by Friday or face the consequences. As Greece have been refusing these requests thus far, a ‘dirty Grexit’ has loomed its head once more. Greece’s Finance Minister Varoufakis was more optimistic, claiming that an “honourable agreement” was within reach. Whilst the next official meeting is not until Friday, Varoufakis has said talks will continue throughout the week, which will surely lead to further euro volatility. Whilst reports will be closely watched today we also have an important day in the data calendar with UK CPI at 9:30 and German ZEW economic sentiment at 10:00. These sets of data may have less impact as traders focus more on the Greek debt crisis.



GBP/EUR: Currently trading at 1.3531

• This pair broke 1.35 yesterday evening and this time, it looks set to stay above the mark. As the Eurogroup meetings ended in disarray yesterday, with Greece confident that a deal would be reached and the rest of the Eurogroup more pessimistic, the euro plummeted against counterparts. Hopes of a euro recovery in the short-term will be pinned on a compromise being reached this week.
• Whilst important data is out today, it may be overshadowed by further reports from Greece. UK CPI is forecast to drop from 0.5% to 0.3% this morning and German ZEW economic sentiment is predicted to rise from 48.4 to 55.4. The usual consequence of these results would be euro strength however UK CPI could be priced into the markets already and tensions around Greece may outweigh low UK inflation.

GBP/USD: Currently trading at 1.5356

• The dollar recovered some lost ground yesterday, pushing this pairing back below 1.534 briefly before the pound resisted further dollar gains. Early pressures on the pound are unlikely to be the start of a downward Sterling trend and low inflation this morning could boost a pound reversal.
• Today’s focus will be on UK data this morning before tuning in to Eurozone news to see if any resolutions can be made. Whilst further meetings are postponed until Friday, Varoufakis has said the government will continue talks regardless of an ultimatum. As global risk appetite decreases, Sterling and dollar could see further strength.

EUR/USD: Currently trading at 1.1347

• The euro lost a cent on the dollar yesterday as Eurogroup talks broke down as Greece rejected demands. Whilst the Greek government remained positive, the Eurogroup chair Dijsselbloem said that now it is up to Greece to accept the program the way it is now. As tensions soar, the euro will likely continue to be sold-off.
• A strong figure is forecast for the German ZEW economic sentiment this morning but this will likely be overshadowed by reports out of Greece. Volatility and euro weakness can be expected to continue.

GBP/AUD: Currently trading at 1.9701

• Yesterday we saw recent trends continue as the rate gradually fell throughout the course of the day. Earlier this morning, the RBA released the minutes from its recent monetary policy meeting, expressing concerns about the strength of the Aussie, in particular against the Yen and euro. However, this failed to stir the market as the announcement presented no new information.
• Following the positivity generated from the UK inflation report last week, we could see sterling strengthen again today on the back of the CPI announcement this morning.

GBP/NZD: Currently trading at 2.0442

• Fairly range-bound trading was seen in this pair as focus has been lifted off commodity-currency pairings. Trading around the 2.046 mark, previous trends suggest that the pound should receive support around 2.0425.
• UK CPI this morning is forecast to drop off from 0.5% to 0.3% and given the reaction to last week’s speech from Carney, this could bring Sterling strength. The GDT price index is due from NZ at any point today and volatility may be seen in anticipation of its release.

GBP/CAD: Currently trading at 1.9095

• The Loonie was able to bank steady gains throughout yesterday’s session as Crude continued to edge higher. In a perfect reflection with oil’s upward trend, the Loonie strengthened against Sterling.
• UK inflation this morning has been predicted to hit the lowest level in 25 years and this could bring Sterling strength after a positive reaction to last week’s BoE report.

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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.

On the Second Day of Eurogroup Meetings, the EU Gave to Greece...

Raphael Sonabend, FX Analyst

Last week’s Sterling close has seen the majority of analysts in agreement that for now, the pound is safe. After a rocky start to the year, where the pound fell against the majority of counterparts, Sterling has recovered much of its lost ground and is now trading at record highs. Trading in favour of the pound continued last week as global tensions rose regarding Greece’s debt crisis and faith in the dollar fell slightly as consumer sentiment fell on Friday afternoon. This morning has seen the Confederation of British Industry raise their UK growth forecasts from 2.5% to 2.7%, supporting the Bank of England’s positive revisions last week to their 2016/17 growth forecasts. A quiet day in the data calendar will leave focus on Greece today as a second day of Eurogroup meetings will inject further volatility in the markets.



GBP/EUR: Currently trading at 1.3495

• Sterling gains continued on Friday as limited data came out of either country. Reaching 1.3533, this pair is still struggling to hold gains above 1.35. This morning saw an encouraging report break as the CBI raised growth forecasts from 2.5% to 2.7% on the back of low oil prices. Furthermore, as house prices have shown constant signs of growth, economists are now considering if we can call an end to the housing slowdown.
• Despite positive UK revisions this morning, in anticipation of the Eurogroup meetings today, the euro strengthened as a result of optimistic reports.

GBP/USD: Currently trading at 1.5410

• Slow gains throughout Friday’s session saw the pound break 1.54 as the US preliminary consumer sentiment survey fell from 98.1 to 93.6. This in itself does not represent a downward trend as it had previously been at an 11-year high. This fall may be due to oil prices starting to rise once more and traders assuming that we have seen the low.
• US banks will be closed today in observance of President’s Day and this pair will therefore trade with focus on the UK. As no UK data is due out today, trading will centre on the positive release from the CBI this morning. With figures being revised up across the board, this pair hit 1.544 this morning and could continue to gain throughout the day.

EUR/USD: Currently trading at 1.1417

• The euro closed on a positive note last week, following a string of poor data out of the US that saw the pairing climb above the 1.14 mark. With a bank holiday in the US today, market activity is set to be influenced by events coming out of the Eurozone.
• Today’s Eurogroup meetings are likely to create some market volatility, as speculation continues regarding Greece’s involvement in the Eurozone.

GBP/AUD: Currently trading at 1.9800

• This pair saw relatively range-bound movement on Friday as a combination of poor US data and increasing global risk appetite, saw this pair bounce between a cent range. New motor vehicle sales m/m data this morning saw a fall rise from 2.6% to -1.5% but the Aussie’s losses were limited.
• Trading today is likely to see pressure lifted off as focus will be on the Eurogroup meetings throughout the day. Aussie strength could be seen if an agreement is reached and global risk appetite increases further. 

GBP/NZD: Currently trading at 2.0471

• The Kiwi gained on the pound throughout Friday’s session, despite US data weakening the US dollar. Opening the session around 2.07, this pair has since managed to fall to 2.0478. Kiwi gains may have been on the back of rising global risk appetite, which is likely to have increased after global tension fell slightly as a Ukraine ceasefire was agreed upon.
• Kiwi gains could continue today as focus turns to the Eurozone; commodity currency pairings will likely take a step back as the GBP/EUR/USD triumvirate fights for strength.

GBP/CAD: Currently trading at 1.9172

• Canada’s manufacturing sales data impressed on Friday, rising to 1.7% in December, despite a 9.3% drop in sales of petroleum and coal.  This provided the Loonie with a boost before the week came to a close.
• A lack of data out for this pairing coupled with US Presidents Day bodes for a quiet session with little to swing momentum. We expect this rate to move within a tight range today, with Loonie strength possible if oil continues to gain.

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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.

Confident Report Sees Volatile Markets

Raphael Sonabend, FX Analyst

The pound has seen strong gains throughout the week as trading was anticipation of the Bank of England inflation report yesterday. Whilst analysts were split on how confident the report would be, Sterling bulls would have been satisfied with Carney’s optimism. A confident outlook signals a pick-up in earnings as well as inflation recovering to hit the 2% target within two years’ time. Across the pond, the dollar has been suffering from a week of over-ambitious forecasting, causing traders to feel let down. Trends continued as US retail sales data missed forecasts yesterday and unemployment claims rose well above predictions. With little data out today, our focus will be on Canadian manufacturing sales at 13:30 and US preliminary consumer sentiment survey at 15:00. After a strong day for oil yesterday and Canadian figures predicted to improve today, we may see Loonie gains push through the weekend. The US survey is forecast to improve slightly but after this week’s poor figures, a strong increase will be needed to restore confidence.


GBP/EUR: Currently trading at 1.3455

• The Bank of England inflation report was more optimistic than expected and as a result the pound strengthened against the euro. As anticipated, Sterling’s reign of strength failed to hold and the day’s session closed at 1.3489, barely above the open at 1.3471. The BoE expect 2015 to register the fastest growth since 2006, aided by low oil prices. Acknowledging the downside risks of the oil price slump, Carney said that inflation could fall below zero.
• Strong German preliminary GDP this morning, coupled with equally strong French preliminary non-farm payrolls data, has seen the euro continue to gain lost ground against Sterling. The euro may therefore continue to gain on the pound for the rest of the day as no more data is due.

GBP/USD: Currently trading at 1.5384

• The pound gained on the dollar throughout yesterday’s session as a confident BoE inflation report, coupled with poor US retail sales data, saw this rate climb from 1.5209 to 1.5414. Retail sales saw a slight climb to -0.8% from -0.9%, but this was below the expected -0.4%. Unemployment claims also posted a poor figure, rising from 279K to 304K.
• Hopes of a dollar recovery will be pinned on the preliminary UoM consumer sentiment survey this afternoon. Forecast to increase slightly from 98.1 to 98.2, the dollar will need a stronger result than that to recover significant lost ground.

EUR/USD: Currently trading at 1.1427

• The euro managed to further strengthen against the dollar yesterday as disappointing figures came out from across the Atlantic in the form of increased jobless claims and lower retail sales. The euro has started on a stronger footing today with German GDP figures announced this morning coming in at 1.6%, which was stronger than anticipated. 
• The most important data out today is the US consumer sentiment survey this afternoon; however with it set to rise only slightly by 0.1, we expect an otherwise quiet day of trading. Unless Euro bulls are struck down by Triskaidekaphobia in today's session, euro gains are likely to prevail.  

GBP/AUD: Currently trading at 1.9854

• The UK inflation report injected further confidence into the UK economy yesterday and the rate was pushed through the 2.00 mark by early afternoon. After a Pavlovian response from traders, Sterling gained against all counterparts, before the rate cooled off slightly and settled around 1.99.
• In the short-term, we expect that the Aussie has weathered the worst part of this storm and that the pairing will be subject to less volatility for the remainder of this month. With no data scheduled from either country today, the rate should continue to trade within a tight range.

GBP/NZD: Currently trading at 2.0682

• Volatility was seen in this pair yesterday as the BoE inflation report pushed the rate up to 2.0856 before the Kiwi resisted Sterling gains and the rate fell back down to 2.0544. Level trading eventually ensued around 2.071.
• With no data due out of either country, this pair will be dependent on US figures. If preliminary consumer sentiment falls far from predictions, further volatility could be seen. 

GBP/CAD: Currently trading at 1.9242

• We witnessed a lot of volatility in yesterday’s session during a wave of UK reports. Confidence was seen as Carney said headlines on inflation, caused by the unexpected drop in energy prices, masked an underlying stronger economy.  Loonie strength was boosted in the afternoon as oil prices breached 60.0.
• This afternoon’s key data comes in the form of Canadian manufacturing sales figures, which has been forecast to rise.  This would give the Loonie some much needed support as the week comes to a close.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports


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.

EU Meetings Bring Further Uncertainty

Raphael Sonabend, FX Analyst

The Eurogroup meetings yesterday saw volatility throughout the markets, with particular impact on Sterling and euro pairings. A strong euro sell-off in favour of the pound saw Sterling gains against the dollar, which pushed the rate back towards 1.53 but momentum wasn’t quite enough to hold the pound’s newfound ground. Finance Minister’s (FinMin) agreed that another day of Eurogroup meetings will be necessary on Monday to reach any sort of conclusion and the majority of FinMin’s were optimistic that a satisfactory end will (eventually) be reached. In Brussels today, the Greek Prime Minister, Alexis Tsipras, will give his debut performance at an EU summit and analysts will be evaluating his every word. The Bank of England’s inflation report at 10:30 today will provide some insight into where the Bank sees the inflation and growth rate going in the next couple of years. Whilst we anticipate a negative report, it is unlikely to be pessimistic enough to pull the BoE out of the central bank vanguard to tighten monetary policy. Another day of uncertainty is likely to be seen and the dollar may fare better than the pound as US retail sales at 13:30 are forecast to strengthen.



GBP/EUR: Currently trading at 1.3444

• As brief reports and comments from the Eurogroup meetings were released throughout yesterday’s session, the pound pushed up against the euro and breached 1.35 before meeting resistance at 1.3536. The general consensus seems to be that whilst no conclusions have been made so far, negotiations should be able to end on Monday.
• Another volatile day can be expected today with the Bank of England inflation report this morning, accompanied by a speech from carney. Turning to the Eurozone, we have a second day of peace talks in Minsk as well as the EU economic summit in Brussels, Greece will be the topic on everyone’s minds. Whilst Greece have no plans to leave the Eurozone, there is the potential for them to be forced to leave the euro if they unilaterally default on the troika bailout programme.

GBP/USD: Currently trading at 1.5248

• Sterling straddled the line just below 1.53 but ultimately failed to breach this mark. Strong gains were seen yesterday morning across Sterling pairings but towards the late-afternoon the dollar recovered all lost ground and gained a cent on the pound.
• Trading today is likely to see risks to the Sterling downside as the BoE report today is unlikely to be optimistic and US data is predicted to be strong. US retail sales m/m is forecast to increase from -0.9% to -0.4% and unemployment claims are predicted to rise from 278K to 282K.

EUR/USD: Currently trading at 1.1336

• Volatile trading was seen in this pair yesterday as Finance Minister’s had differing opinions on the progress of the Eurogroup meetings. Greek FinMin Varoufakis sees it likely that negotiations will end on Monday and said there was absolutely no chance of Greece leaving Eurozone.
• Another day of uncertainty is expected as peace talks will continue in Minsk and the EU economic summit will turn to issues in Greece. With US data forecast to be strong, dollar gains are likely to continue throughout the day.

GBP/AUD: Currently trading at 1.9858

• The rate continued to move in sterling’s favour yesterday morning before finding resistance around the 1.98 mark during the afternoon session. This morning saw the Australian unemployment rate climbing to 6.4%, the highest figure since August 2002, and the Sterling/Aussie rate rose two cent and is now threatening to surpass the 2.00 mark. This employment report has reinforced the RBA’s decision to cut the rates and has also increased the probability that a second 25bp rate cut will occur. This places further importance on Governor Stevens’ speech this evening (at 22:30), which could inject further volatility into the market.
• Traders will be looking to decipher the UK inflation report this morning, which provides us with a 2 year assessment of the prospects for UK inflation over the following two years. This should cause some strong rate movement throughout the course of the day.

GBP/NZD: Currently trading at 2.0712

• Slow gains were made by the pound throughout yesterday’s session with added momentum seen in the early hours of this morning as poor Australian employment figures were released. Having temporarily breached 2.08, the Kiwi is now starting to recover lost ground.
• Focus for today will be on the BoE’s inflation report this morning. Alongside the report will be a letter from Carney to the Chancellor explaining why inflation has fallen below 1% of its target range and what will be done to address the situation. Insight into Carney’s plans could bring Sterling volatility if anything unexpected is seen.

GBP/CAD: Currently trading at 1.9148

• Yesterday saw a further fall in Crude towards 54.2, which led to Loonie weakness and Sterling strength before this pair met resistance around 1.936 as Crude (and therefore CAD) saw a slight reversal.
• Trading will centre around the Bank of England inflation report this morning and with pessimism expected, the Loonie may continue to recover lost ground throughout the day.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports


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.

Speculative Trading Surrounds Eurogroup Meetings

Raphael Sonabend, FX Analyst

Whilst monthly UK manufacturing production fell to 0.1% from 0.8%, annual figures remained strong and saw a 2.4% increase. With a recent slip in oil prices, which limited the production of oil-manufacturing machinery, this figure represents the downside risks of falling oil prices but also the current strength of the UK sectors, as reflected in three strong PMI figures last week. Trading today will focus on peace talks taking place in Belarus before turning to Brussels for the Eurogroup meetings. Heavy volatility and lower global risk appetite can be expected throughout today with the potential to extend through the week if anything unexpected is announced.



GBP/EUR: Currently trading at 1.3481

• Sterling strength was seen throughout yesterday morning as monthly manufacturing production fell from 0.8% to 0.1%. A poor figure on the surface was not as bad as appearances as manufacturing production rose by 2.4% compared to the year before.
• Volatile trading is likely to be seen today as the Eurogroup meetings will take place throughout the day. Whilst the meetings are closed to the press, Finance Ministers could give comments to reporters and therefore strong movements may be seen in euro pairings as analysts scrutinise their every word.

GBP/USD: Currently trading at 1.5265

• The pound gained on the dollar throughout the day, pausing briefly in the morning when manufacturing production registered a monthly decline. Sterling has broken free of the dollar shackles this morning and is currently attempting a rally towards 1.53; perhaps a sign of confidence in the UK economy in anticipation of the Eurogroup meetings today.
• US Crude inventories data is likely to be overshadowed by the Eurogroup meetings today; Cable will likely feel the wake of euro volatility throughout today’s session.

EUR/USD: Currently trading at 1.1318

• The dollar slowly gained on the euro yesterday, with a particularly strong downward spike seen around midday, which was likely due to markets being influenced by Greece headlines. Last night saw the Greek government winning the confidence vote by 162-137 and the euro strengthened slightly as a result.
• A big day today as two meetings will govern trading throughout. In Belarus; German, French, Ukrainian and Russian leaders are meeting to discuss a peace agreement and failure to do so could lead to further EU sanctions. In the evening, euro-area Finance Ministers will try to discuss a new deal for Greece and how to resolve the debt crisis. Volatility can be expected throughout the day.

GBP/AUD: Currently trading at 1.9665

• On the back of the fairly strong UK manufacturing production y/y and GDP data yesterday, we witnessed further Sterling gains throughout the afternoon. The overnight Australian data proved to be very strong, with consumer confidence up 8% from a previous reading of 2.4%, home loans rose to 2.7% from -0.4% and investment lending data up to 6% from -2.2%. In light of the recent pessimistic RBA comments, this was not enough to halt the sterling charge and the rate continued to climb this morning above 1.969. 
• We could see some added volatility today with the Eurogroup meetings likely to send waves across the FX markets.

GBP/NZD: Currently trading at 2.0587

• The pound gained on the Kiwi throughout the majority of yesterday, reaching highs of 2.0635, before the NZD recovered most of its lost ground before the end of the day. Sterling’s strength this morning was seen as well in this pairing and the pound has gained a cent so far in this session.
• With the Eurogroup meetings today, global risk appetite is likely to be subdued and we could therefore see Sterling strength continue throughout the day.

GBP/CAD: Currently trading at 1.9222

• Sterling gains seen yesterday as annual UK manufacturing production figures registered a strong growth, Crude slipped from 58.4 to 56.2 and Bank of Canada’s Senior Deputy Governor Wilkins said that the economy is still below potential. Further advances have been made in this morning’s session as the pound continues on its warpath.
• Following the trend of other commodity-currencies, the Loonie is likely to weaken today against the pound as traders choose to invest in ‘safer’ currencies such as the pound during today’s meetings.

Subscribe to our morning, weekly or monthly reports here and make sure you never miss an update: https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports

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.

Eurozone Chaos Brings Market Volatility

Raphael Sonabend, FX Analyst

A light day on the data front yesterday saw pairings trade with more focus on news and announcements around the world than on data that was released. As leaders throughout the Eurozone urged Greece to stick to their bailout plans, Greece was busy tearing up their EU/IMF Troika programme whilst being rejected war reparations from Germany whose Chancellor was flying around the world discussing plans with world leaders on how to pacify Russia. Needless to say, euro volatility reared its ugly head once again and with February due to have a relatively light data calendar, this is likely to continue throughout the month. Trading focus today will move to the UK in the morning as manufacturing production figures are due out at 09:30. Despite being forecast to drop off slightly, the spotlight will quickly move back to the Eurozone and Sterling pairings may not suffer too much as a result.



GBP/EUR: Currently trading at 1.3462

• A few attempts were seen by the euro to push this rate lower yesterday but the pound put up a strong resistance and the euro failed to hold any gains for too long. As reports came out throughout the day regarding the Greek crisis, euro-traders reacted with mixed opinions and volatility was seen; this is likely to be the same story for the next few weeks as we are due for a quiet month.
• Sterling-traders are likely to be fully focused on Thursday’s upcoming BoE inflation report but UK manufacturing production could pull focus if the figures are far from predictions. After last week’s strong PMI data, perhaps manufacturing will bring some surprises.

GBP/USD: Currently trading at 1.5236

• A range-bound day of trading was seen yesterday as no data emerged from either country. A few speeches from Fed members saw slight market movement as the dovish Powell said a strong dollar will not limit the economy’s momentum, and hawkish members George and Fisher (Fisher will be stepping down in March) both expect a slow and measured rate hike to begin this year.
• Today’s focus for trades will be on this morning’s manufacturing production figures out of the UK, forecast to drop off from 0.7% to 0.3%, traders are unlikely to react too strongly to low figures in anticipation of Thursday’s inflation report.

EUR/USD: Currently trading at 1.1318

• A few euro rallies were attempted in yesterday’s session as reports of the Greece debt crisis continued to be released. Particular volatility was seen throughout euro pairings as Germany refused to respond to Greece’s demand for war reparations whilst stating that it was imperative for Greece to stick to their bailout plan.
• Limited data today will leave euro pairings dependent on Eurozone news whilst USD traders may turn to ‘medium-impact’ data in the form of JOLTS job openings this afternoon. With job openings predicted to increase slightly from 4.97M to 5.03M, similar trends to yesterday are likely to be seen with volatile trading but the dollar ultimately coming out on top.

GBP/AUD: Currently trading at 1.9520

• Aussie strength was seen throughout yesterday on the back of RBA governor Stevens’ launch of the official Australian Yuan clearing bank in Sydney. The pound has been recovering lost ground in this morning’s session as Chinese annual CPI figures saw a fall from the previous result of 1.5% to 0.8% and PPI saw the 34th monthly decline in a row as annual figures dropped off by -4.3%, making it the worst ‘deflation’ since October 2009.
• Trading on the back of these poor figures is likely to continue throughout the day and even with UK manufacturing production forecast to decrease, the Aussie is likely to continue weakening.

GBP/NZD: Currently trading at 2.0524

• The Kiwi gained steadily on the pound throughout yesterday morning and afternoon, driving the rate down from 2.0755 to 2.0454, before level-trading took over in the evening. Further NZD gains were made this morning as NZ Finance Minister, Bill English, responded to warnings about skyrocketing house prices, saying that they “cannot go on for ever”. Whilst English did not give any plain answers to what he/the Bank would do, he did say that the Reserve Bank may help but there should be no expectations for the bank to “pick up the tab” for the Government’s “failed” housing policies. Confident words from English, which suggested that the matter wouldn’t go too far out of hand, saw early morning Kiwi strength today.
• With our only data-of-interest today being UK manufacturing production this morning, which is forecast to drop off slightly, Kiwi gains could continue throughout the day.

GBP/CAD: Currently trading at 1.9017

• A strong day for the Loonie yesterday as this pair fell from 1.9100 down to 1.8914, possibly as a result of Crude strengthening from 57.4 to 59.2 around the same time. The pound has since been recovering lost ground in this morning’s session.
• Today’s trading will focus on UK manufacturing production; with a decline that is likely already priced into the markets due, the pound could continue to recover lost ground 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.

A Quiet Week Lies Ahead

Raphael Sonabend, FX Analyst

Strong US figures held trading focus on Friday as non-farm employment figures capped off the largest three-month gain in 17 years. Equally strong data was seen from Canada as building permits, employment change and unemployment rate figures all beat predictions. A speech from the Royal Bank of Australia’s (RBA) Governor Glenn Stevens saw global risk appetite increased as he announced the opening of a Bank of China in Sydney as the official clearing back for the renminbi. With this launch, the RBA is signalling optimism that trades with China will increase and transactions will become quicker and more efficient; commodity-currencies strengthened as a result of this confidence. A quiet data week has been promised ahead, which means that Greece will remain firmly in the spotlight, another euro dip is therefore a strong possibility.



GBP/EUR: Currently trading at 1.3433

• A lack of UK data proved beneficial for the pound on Friday as US figures took centre stage and forced the euro lower. Stronger-than-expected non-farm employment change data saw a EUR/USD sell-off that pushed the pound a cent higher against the euro. Euro weakness was seen again over the weekend when traders in the Asian markets reacted to ex-Fed president Greenspan’s warning that for the Eurozone to recover, Greece must leave the Eurozone. He sees a ‘Grexit’ as inevitable as Greece staying doesn’t help “them or the rest of the Eurozone”, whether he is correct or not will remain to be seen but his pessimism was certainly reflected in euro pairings.
• Sterling weakness has been seen today, possibly as a result of articles out this morning, which provide the details of how HSBC’s Swiss bank ‘helped clients dodge millions in tax’. With no data out today, the pound could continue to weaken throughout today’s session.

GBP/USD: Currently trading at 1.5238

• A cent drop was seen in Cable as the dollar gained on the back of stronger-than-expected employment figures last Friday. Non-farm employment change fell to 257K from 329K, but was above the forecast 236K; unemployment rate rose to 5.7% from 5.6%. January’s increase marked the biggest three-month gain in 17 years as well as the strongest wage gain figures since 2008. Increasing jobs is a strong reflection of confidence in the markets and it is therefore no surprise that the dollar gained so strongly as a result.
• The greenback met with resistance this morning around 1.52 and the pound has since been posting its own gains. With no data due out today, the pound could continue to recover lost ground throughout this session.

EUR/USD: Currently trading at 1.1346

• A EUR/USD sell-off on Friday saw this pair fall from 1.1465 to 1.1316 as US employment figures marked record highs. Continued euro weakness was seen over the weekend on the back of Greenspan’s pessimistic words about the Eurozone and its future outlook.
• No data out today could allow for the euro to recover some lost ground against the greenback. With a quiet data week due ahead, Greece will remain firmly in the spotlight and any news with particularly optimistic/pessimistic tones could see euro strength/weakness respectively. 

GBP/AUD: Currently trading at 1.9560

• Following Governor Glenn Stevens’ comments this morning, instilling confidence in a long term Aussie fight back, we have seen some initial market response with the rate moving in favour of the AUD.
• With no more data due out today, the Aussie could continue to gain on the pound. Early morning data tomorrow may see these advances reversed as Chinese quarterly CPI is forecast to fall from 1.5% to 1.1%.

GBP/NZD: Currently trading at 2.0604

• This pair traded between a large range of 2.0814 and 2.0573 last Friday as this pair reacted to US data on Friday afternoon. Strong US employment figures saw volatility as the pound gained just under three cent before the Kiwi recovered all lost ground, sideways trading then continued for the rest of the day.
• Sterling has weakened against the majority of higher-yielding currencies this morning and the Kiwi was no exception. No data out today should allow the NZD to continue to strengthen in today’s session.

GBP/CAD: Currently trading at 1.9052

• Slight volatility was seen in this pair on Friday afternoon as sideways trading was halted by a two cent downward spike in favour of the Loonie before the pound recovered all lost ground and level trading continued. Canadian building permits data rose from -13.6% to 7.7%, employment change rose from -4.3K to 35.4K and unemployment rate remained at 6.6%. Strong figures across the board failed to hold the interest of traders as the pound quickly recovered all lost ground and range-bound trading has continued since Friday evening.
• Slight Loonie strength has been seen this morning as global risk appetite increased on the back of Glenn Stevens’ speech however this has been limited by a drop in oil prices in this morning’s session. Range-bound trading is likely to continue throughout today with possible risks to the Loonie downside if we see a further drop in Crude.

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 Strengthens as Tensions Rise

Raphael Sonabend, FX Analyst

Yesterday saw Sterling strengthen against all counterparts as the Bank of England held the official bank rate at 0.50%. As geopolitical tensions continued to rise around the world, the pound saw strength as UK data has been placed on the back burner during a time of relative calm for the UK. This trend is likely to continue for the next couple of months with the pound seeing strength as tension and disharmony continues to grow in the Eurozone and throughout the world. Focus today will be on Canadian and US employment data at 13:30. Whilst Canadian employment change is forecast to rise from -4.3K to 4.7K, US non-farm employment change is predicted to fall from 252K to 236K. We could see another day of Sterling gains if the dollar weakens on the back of falling non-farms data.



GBP/EUR: Currently trading at 1.3370

• The euro saw strength yesterday morning following a positive outlook from the EU economic forecasts. For the first time in eight years, every member state in the EU is expected to see economic growth. Forecasts have been revised up across the board with growth predicted to reach 1.3% in the euro-area at the end of this year and 1.9% in 2016. Sterling resisted euro gains around 1.331 and pushed the rate back up in the pound’s favour, this pairing then traded on an upward trend for the remainder of the day.
• The only data of note out this morning is the UK trade balance figures this morning. Forecast to drop off slightly from -8.8B to -9.0B, this is unlikely to affect this pairing too much in either direction. With no more data due out for the rest of the day, Sterling gains are likely to continue against the euro.

GBP/USD: Currently trading at 1.5310

• A stellar Sterling performance seen yesterday as the pound climbed almost two cent on the greenback yesterday, breaking the 1.53 mark before trading with sideways movement around 1.533. Yesterday’s Sterling strength reinforced previous trends that the pound fares particularly well when data is scarce and with a quiet February due, we could see a strong month for Sterling.
• Whilst data will be limited today, it will include the all-important non-farms data out of the US in the afternoon and we anticipate volatility will be seen immediately after the release. With non-farm employment change forecast to decrease slightly and the unemployment rate predicted to stay the same, USD weakness may be seen.

EUR/USD: Currently trading at 1.1453

• Euro weakness began trading yesterday as speculation arose concerning the Swiss National Bank buying EUR/USD. EUR/CHF saw a two cent downward spike on the back of this rumour, whether it will be fulfilled or not will remain to be seen but it would be highly unlikely as Swiss reserves already contain a large amount of euros.
• Trading today will be on the back of US employment data this afternoon and with non-farm figures predicted to drop off slightly, we could see another EUR/USD rally towards 1.15.

GBP/AUD: Currently trading at 1.9543

• The RBA monetary policy statement brought no surprises as inflation and growth forecasts were revised lower but in line with expectations. Unfortunately the bank failed to give a clear indication of the future plans for the Australian interest rate and the Aussie weakened on the back of this.
• With no more Australian data due out for the rest of the day, this pairing will be US-data dependent. An anti-climactic RBA statement this morning, coupled with predicted declines in US non-farms data, could see Aussie weakness in today’s session.

GBP/NZD: Currently trading at 2.0618

• A two cent rise was seen in this pairing yesterday as the pound strengthened against the majority of counterparts. A lack of data saw Sterling strength before the Kiwi resisted around 2.075 and began posting gains of its own.
• With focus on US data today we could see further NZD weakness as employment data is predicted to decline slightly.

GBP/CAD: Currently trading at 1.9071

• Relatively level trading was seen yesterday around 1.908 as oil saw a negative spike towards $53 before recovering back toward $58. Canadian trade balance figures fell from -0.3B to -0.6B but this remained above the forecast -1.2B. Mixed data ensured sideways trading throughout the day.
• Focus today will be on Canadian employment and building data this afternoon. Building permits are forecast to rise from -13.8% to 4.8%, a strong result that could bring Loonie strength. Mixed data is expected from employment with the unemployment rate predicted to rise to 6.7% from 6.6% and employment change forecast to improve by 9K. After an early-morning spike in crude today, optimistic traders may choose focus on the more-positive side of this release and the Loonie could see strength 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.

Greek Debt Crisis Sees End to Euro Momentum

Raphael Sonabend, FX Analyst

Yesterday evening the ECB announced that they would be lifting the waiver on Greek bonds as collateral. This surprise announcement saw the recent euro gains finally running out of steam and the single bloc currency tumbled against the majority of counterparts.  Across the pond, the dollar benefited from this euro weakness and after a week of the greenback losing momentum, a EUR/USD sell-off placed the dollar back on centre stage. UK PMI data remained strong yesterday as falling oil prices led to lows in input and output costs across the board, outlook remains optimistic as cheap oil benefits the sectors. US crude oil inventories saw a rise of 6.3M barrels, causing Brent oil to plummet back towards $50 a barrel, unsurprisingly the Loonie saw considerable weakness as a result. Today we will briefly glance over the UK official bank rate vote at 12:00 before turning our attention to US trade balance and unemployment claims data at 13:30. With the euro and Loonie weakening once again and the dollar continuing on its path of strength, trends seen last week are likely to dominate the markets.



GBP/EUR: Currently trading at 1.3372

• Strong services data yesterday morning saw the pound gain over a cent on the euro before resistance was met around 1.335. Towards the early evening the euro’s momentum, which has been seen throughout this week, wavered and the pound broke the euro’s resistance and climbed another cent. In a conference in Brussels, Yanis Varoufakis, the Greek finance minister, announced that Athens has been in talks with the IMF over a debt swap proposal. As Greece’s debt situation is closely watched and Syriza start to settle in (or not as the case may be) to running a country, euro volatility is likely to continue.
• Today’s data releases are likely to be a non-event. The EU economic forecasts this morning are likely to be priced into the markets already as individual member states have already released forecasts and opinions for the year ahead. This morning’s official bank rate vote from the UK will also be priced into the market as all members previously voted to hold rates.

GBP/USD: Currently trading at 1.5204

• Yesterday saw services PMI out of the UK rising to 57.2 from 55.8, above the forecast 56.6. No surprises were seen in the services report as input and output costs fell as the result of low oil prices. All three PMI surveys combined saw the strongest job creation figures since records began in 1998, with an average of 70,000 jobs created a month. US ADP non-farm employment change data saw a fall from 253K to 313K, below the 224K forecast, our real interest will be on non-farm data on Friday and this result barely affected Cable.
• US data will be in the spotlight today with trade balance and unemployment claims figures being released. With trade balance forecast to increase by 0.8B and unemployment claims predicted to worsen slightly, Cable could witness volatility in the early afternoon.

EUR/USD: Currently trading at 1.1370

• Euro momentum, which was seen in the beginning of the week, began to wither away yesterday as tensions arose surrounding the Greek debt crisis. The dollar gained a cent on the euro as US ISM non-manufacturing PMI rose from 56.2 to 56.7 and analysts remained ‘cautiously optimistic’.
• Focus today will be on the US trade balance and unemployment claims data this afternoon. Despite the data predicted to be mixed, the dollar is likely to continue gaining on the euro as Syriza leader, Tsipras, continues giving conferences around the world.

GBP/AUD: Currently trading at 1.9526

• Yesterday saw UK PMI services data register a strong increase and push this rate in favour of the pound before meeting resistance around 1.966. Improved Australian retail sales data provided little support for the Aussie as poor housing and business confidence results both fell significantly. 
• Following the rate cut on Tuesday, traders will be scrutinising the RBA monetary policy statement early tomorrow morning for any comments relating to the longevity of the recent decision. As per usual, hawkish sentiment could lead to heightened volatility and Aussie strength.

GBP/NZD: Currently trading at 2.0614

• Volatile trading was seen yesterday as the Kiwi gained on the pound until resistance was met around 2.036 and Sterling pushed the rate back toward the 2.065 resistance level. Now trading with sideways movement, this pair has resisted influence from US data as the pound continued to strengthen yesterday evening.
• New Zealand banks will be closed today in observance of Waitangi Day and our focus will therefore be on UK and US figures. With UK data likely to be glazed over and US data forecast to deliver mixed results, level trading could continue throughout the day.

GBP/CAD: Currently trading at 1.9097

• Yesterday saw a strong session for the pound after UK Services grew and the Canadian Ivey PMI was far off prediction, expanding at the slowest pace in almost four years. Sterling was able to reverse gains made by the Loonie earlier this week after Crude fell almost 10% on the back of US oil inventories data.
• Looking ahead to this afternoon, we have the official bank rate from the UK, which we expect will remain unchanged, followed shortly by the Canadian Trade Balance figures, which economists predict will show a slowdown in demand for exports. We therefore expect risks to the Loonie downside.

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.

Can Services Support Sterling Strength?

Raphael Sonabend, FX Analyst

After a month of traders investing heavily in the greenback, higher-yielding currencies have stepped into the light and as the RBA cut their rates, the Loonie and Kiwi competed for strength. Whilst oil prices rose yesterday for a third consecutive day, analysts have been debating whether we have seen a low or if the current rise is a ‘dead cat bounce’. Either way, the Canadian dollar has been strengthening as a result and yesterday we saw month-highs in the CAD/AUD pair. The Kiwi saw a similar boost as strong dairy and employment data yesterday helped gains on the back of the RBA rate cut. Today will see commodity-currencies take a step back as UK services PMI and US ADP non-farm employment change and ISM non-manufacturing PMI data will govern trading. With UK data forecast to improve, we could see Sterling strengthen against counterparts, especially as services data is often seen as the most important of the three sectors. Scepticism surrounds ADP data predictions as the result tends to be far from forecasts, volatility could therefore be seen in USD pairings.



GBP/EUR: Currently trading at 1.3233

• Strong UK construction PMI figures yesterday saw a rise from 57.6 to 59.1, above the forecast 56.9. Whilst output and new business growth recovered from the 17-month low seen in December, business outlook was the second-lowest seen since October 2013. Previously, outlook has remained strong within the UK sectors however with global economic uncertainty growing and a UK general election looming, pessimism is once again starting to rear its head.
• After a month of selling-off euros, it appears that traders are now starting to buy back whilst the euro is weak and yesterday we saw the euro gain a cent on the pound. Hopes for a Sterling recovery will be pinned on UK services PMI data out this morning, forecast to rise from 55.8 to 56.6, the pound could remain steady if services outlook is perceived as optimistic.  

GBP/USD: Currently trading at 1.5191

• Sterling gained throughout yesterday’s session as construction PMI saw an unexpected rebound from December’s 17-month low. Gains were supported by poor US factory orders data, which were released yesterday afternoon. Unsurprisingly orders fell below expectations however short-term outlook remained positive as analysts perceived a ‘smaller-than previously reported drop’ as a sign of a rebound in the near-future.
• High-impact data released throughout today’s session could inject some volatility into this pairing. UK services PMI, forecast to increase slightly, could bring Sterling strength in the morning before crossing the pond to mixed data from the US in the afternoon. ADP non-farm employment change is forecast to fall from 241K to 224K and ISM non-manufacturing PMI is predicted to rise from 56.2 to 56.6. ADP data frequently misses the mark and volatility is therefore often seen immediately after the actual result is released.

EUR/USD: Currently trading at 1.1467

• Strong Spanish unemployment change figures yesterday afternoon, coupled with a lack of US data, saw the euro climb just under two cent on the dollar. After several EUR/USD sell-offs in January, the euro may find an opportunity in a less-data-heavy February to regain some lost ground.
• Whilst no data of note is due out of the Eurozone, a meeting this morning between Syriza’s finance minister Varoufakis and ECB president Draghi, should keep traders on their toes, listening for any clues of how Syriza will spur a Greek economic recovery. US data this afternoon should add to volatility as ADP non-farm data is forecast to decline and ISM non-manufacturing PMI is predicted to increase.

GBP/AUD: Currently trading at 1.9401

• After the initial Sterling gains yesterday morning sent the rate crashing through the 1.96 barrier, we witnessed a slight correction before stabilising around 1.94 in the early hours of this morning. In anticipation of strong UK PMI services data, we have seen a slight rise in the rate in the last hour.
• Traders will have an eye on US non-manufacturing PMI data this afternoon followed by Australian retail sales later tonight. With both sets of data forecast to improve slightly on last month, this could provide some relief for the Aussie.

GBP/NZD: Currently trading at 2.0490

• After the RBA cut interest rates yesterday morning, other higher-yielding currencies came into the spotlight for investors. The Kiwi saw particular strength as strong data was released throughout yesterday. GDT price index data out of New Zealand saw a strong rise in whole milk powder of +19.2%, outweighing the -11.1% losses from Cheddar. The overall rise was 9.4%, well above the previous 1.0%. Employment data in the evening saw quarterly change rise to 1.2% from 0.9% but unemployment rate rose to 5.7% from 5.4%. As the labour force participation rate rose to 69.7%, a record high, traders focused on the positives side to these releases and the Kiwi continued to strengthen.
• Early this morning RBNZ governor Wheeler spoke on the outlook for the New Zealand economy. Key points from his speech were that housing is at a great ‘risk of a sharp correction’ and that the official cash rate could be cut in the future to help inflation and counter the effects of falling oil prices. UK services PMI today could help the pound to recover lost ground if data comes in line with (or beats) predictions.

GBP/CAD: Currently trading at 1.8855

• Expansion in the UK construction sector was much better than predicted, rising to 59.1 from 57.6 previously, this however failed to impact this pairing yesterday as rising oil prices strengthened the Loonie.
• Today brings UK service PMI data, with forecasts hinting at a possible rise, followed by this afternoon’s Canadian Ivey PMI data, which is forecast to fall from 55.4 to 53.8. Poor Canadian data forecast, combined with rising oil prices, could lead to a 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.