Global Currencies Update

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Re: Global Currencies Update

Postby voight » Tue Jul 04, 2017 10:57 pm

British Pound: BoE Rate Hike will be No Saviour, Sterling to Struggle v Euro and Dollar
Written by Will Peters

Pound Sterling might struggle to find further strength against the Euro and Dollar from current levels, even if the Bank of England goes ahead and raises interest rates argue researchers.

For Sterling-watchers, markets have recently shifted emphasis on what matters for the currency with eyes turning from domestic politics and Brexit to the Bank of England.

Money markets presently have odds of an interest rate at the Bank of England being at 50/50 by the time the year is out.

We saw the Pound enjoy its best week in months at the end of June as two of the Bank’s ‘big guns’ said a rate rise might be necessary owing to the UK’s elevated inflation rates.

Both Governor Mark Carney and Chief Economist Andy Haldane dropped hints that such a move was imminent within hours of each other.

Markets have repriced from suggesting a negligible chances of an interest rate hike a month ago, to even odds by end-2017 and nearly full-odds by end-2018, with GBP strengthening commensurately.
Can this Gift Keep Giving?

The question now, at the start of July, is whether this theme of ‘higher interest rate expectations = a higher exchange rate’ can continue delivering a stronger Sterling.

“We note however that Carney’s concession of the possibility of hikes was couched in conditionality, we still think the bar for a rate hike is very high given expectations of subdued growth over 2H17 and ongoing uncertainty around the Brexit transition process,” says Daniel P Hui at JP Morgan.

The question of Brexit makes, “the repricing phenomenon in the UK inherently different than that seen most elsewhere, which is motivated by downside risk reduction or outright reflationary conditions,” adds Hui.

This calls into question the general rule of thumb that rising interest rates are positive for the British Pound.

“With potential BoE hikes only motivated by upside inflation risk, in spite of a poor growth outlook, higher rates are more ambiguous for the currency, given the greater risk of a policy mistake that undermines the economy,” adds the JP Morgan analyst.

The risk for Sterling is that inflation rises start slowing over coming weeks, particularly as global fuel prices have turned around. Furthermore, the one-off impact on prices of a fall in Sterling appear to be easing as suggested by the latest survey data on hand.

June’s manufacturing PMI shows price pressures on UK manufacturers has eased significantly, and the pass-through of this easing will soon be felt on the high-street.

This might convince the Bank to keep interest rates unchanged for longer.

And there is the suggestion that even if the Bank were to go ahead and raise interest rates, the move might be damaging for the economy and, by extension, the Pound.

Could we already be seeing the view that a potential interest rate rise in 2017 is not necessarily positive for Sterling as GBP/USD fails to breach above the 1.30 level once more?

Analysts at JP Morgan are “ambiguous” as to what a rate rise means for the UK economy and the currency. They reckon the Pound should struggle going forward, “we remain wary of GBP strength and biased to trade Sterling from the short side,” says .

Others believe an interest rate rise would in fact be an outright negative.

“Those who advocate a rate hike believe the combination of high inflation and low unemployment – two cyclical considerations – warrants action,” says HSBC Strategist David Bloom.

Even in such a cyclical world, Bloom argues the case for rate hikes in the UK are not clear cut – a lot of economic activity data (e.g. wage growth, retail sales) have disappointed in recent months.

For HSBC, the dominant issues for the UK are structural and political in nature.

“In the structural and political world that GBP inhabits, we believe rate hikes could be damaging,” says the analyst.
Where is the Pound Going then?

Based on the above it comes as no surprise that HSBC holds a decidedly more negative view on Sterling’s outlook given their conviction on the negativity towards the economy and the potential impact of any interest rate rise.

Latest in-house forecasts at the British bank see GBP/USD going down to 1.20 by year-end, and GBP/EUR going down to parity.

JP Morgan are more generous on Sterling and see stability characterising the market over coming months as they eye a GBP/USD exchange rate of 1.20 being struck at year-end.

The GBP/EUR exchange rate is at 1.1364.
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Re: Global Currencies Update

Postby voight » Sun Jul 09, 2017 12:51 am

Weekly Forex snap against LKR- 08/07/2017

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- A correction took place this week for GBP against LKR following a huge gain in last week. GBP is on course to appreciate further at the expense of LKR to the critical LKR 200 rate within coming weeks.

- So far when considering YOY data USD has appreciated close to 6%, GBP appreciated by 9.25% and EUR appreciated by 5.4%. JPY has shed 6.25% YOY due to imports being restricted from Japan to to higher taxes and changes in consumer preference regarding vehicles which was further fueled by growing uncertainty of standard economic policies during YOY.

- GSP+ approval was a sign of relief for Q2 as it was poised to improve Sri Lanka's average exchange rate on basket of currencies due to trade being limited to few major currencies. However Central Banks decision to not to interfere with currencies have caused the expected gains to be vanished.

- The outlook on currencies by end of Q3/Q4 will depend on several factors. Deals on PPPs for states non strategic assets, Port Deal, Port City and how companies will capitalize on GSP+, etc.. will be noteworthy. CB has indicated that they are likely to meet the reserve target hence to keep the currency steady without further depreciating the above said deals have to go through to ease up currency markets. Also government should capitalize new FDIs through the introduction of the new exchange control act which will help LKR immensely.
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Re: Global Currencies Update

Postby voight » Sun Jul 09, 2017 8:13 am

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Re: Global Currencies Update

Postby NC+ » Thu Jul 13, 2017 7:37 am

Dow at record, European stocks up as Yellen pledges gradual rate hikes

AFP - European and US stocks scored solid gains Wednesday, with the Dow ending at a fresh record, as investors welcomed congressional testimony by Federal Reserve Chair Janet Yellen reiterating the pledge to gradual interest rate increases.

Sentiment also got a boost from higher oil prices following US inventory data showing a big drop in petroleum supplies.

Yellen, appearing in a twice-annual hearing on Capitol Hill, reaffirmed the US central bank's plan for gradual rate hikes, as long as the economic data remains solid.

But Yellen noted that inflation lags the Fed's two percent target.

The overall impression "eased some of the rate-hike concerns that surfaced last week following the release of the FOMC minutes from the June meeting, which initially left the impression that the Fed plans to press on with a tightening of policy despite the persistence of below-target inflation data," said Briefing.com.

The Dow rose 0.6 percent to finish at its first record since June 19.

European equities also closed strong, with Paris, London and Frankfurt all winning at least one percent.

But the dollar retreated against the pound and yen after Yellen adopted a more dovish line than some expected.

"At the end of the day, the Fed is still telling us rates will rise again but September is off the table," said Kathy Lien, managing director of BK Asset Management.

Oil prices pushed higher after US inventory data showed a 7.6 million barrel decline in petroleum inventories.

That lifted shares of BP rose 1.9 percent, Italian oil giant Eni added 1.7 percent and Dow-member Chevron was up 0.8 percent.

Technology shares were also were strong, with Facebook jumping 2.3 percent, Google-parent Alphabet 1.5 percent and Microsoft 1.7 percent.

Amazon gained 1.3 percent as it hailed a successful Amazon Prime shopping day on Wednesday, saying it attracted more new members to the subscription service than on any previous day.

Airline shares were lifted after American Airlines said second-quarter revenue per seat mile had risen five-to-six percent from the year-ago period, a better range than previously.

American Airlines rose 4.2 percent, Delta Air Lines gained 2.2 percent and United Continental 4.7 percent.
- Key figures around 2045 GMT -
http://www.economynext.com/Dow_at_recor ... 09-11.html
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Re: Global Currencies Update

Postby voight » Sun Jul 16, 2017 7:30 am

Weekly Forex snap against LKR- 15/07/2017

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- The EUR and GBP appreciated this week while USD and JPY remained almost flat.

- GBP crossed a key psychological barrier of 200 this week and is expected to surge at the expense of LKR in coming months.
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Re: Global Currencies Update

Postby voight » Sun Jul 23, 2017 9:41 am

Weekly Forex snap against LKR- 22/07/2017

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- GPB adjusted towards a correction this week following weeks of gains and breaking the 200 barrier last week. The gains will likely to continue in the coming weeks.

- USD and EUR continued to appreciate against LKR this week. Government is urging exporters to make their products available more strongly to EU countries to avoid EUR reaching an all time high against LKR.

- Governement is confident that they will get the Hambanthota deal done before end of this month. This deal will likely to give some short term stability to USD even though aggressive level of FDI's need to come through to avoid USD breaking several all time high against LKR
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Re: Global Currencies Update

Postby PAT » Sun Jul 23, 2017 10:32 pm

Thanks V....
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Re: Global Currencies Update

Postby Shadow walker » Mon Jul 24, 2017 7:10 am

voight wrote:Weekly Forex snap against LKR- 22/07/2017

curr.22.07.png

Image

- GPB adjusted towards a correction this week following weeks of gains and breaking the 200 barrier last week. The gains will likely to continue in the coming weeks.

- USD and EUR continued to appreciate against LKR this week. Government is urging exporters to make their products available more strongly to EU countries to avoid EUR reaching an all time high against LKR.

- Governement is confident that they will get the Hambanthota deal done before end of this month. This deal will likely to give some short term stability to USD even though aggressive level of FDI's need to come through to avoid USD breaking several all time high against LKR


Thanks voight.. :-bd
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Re: Global Currencies Update

Postby Contra » Mon Jul 24, 2017 10:36 am

Thank you Voight for your nice presentation and updating this thread.

As I said before every currency has cycles. Many acted like end of the world after seeing falling pound and Euro, other economic and political crisis in Europe. But there were plenty of opportunities for savvy investors. Sri-Lankan export sector and tourism sector also affected at some extent as a result of weak and falling pound and euro.

Companies which get any business from European region should benefit from strong EURO. Actually strong EURO is good news for some local companies as well as for hotels. They will get more rupees. Good luck!
Company, stock market, politics and the economy are four different things.

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Re: Global Currencies Update

Postby voight » Sun Jul 30, 2017 11:00 am

Weekly Forex snap against LKR- 29/07/2017

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- USD remained almost flat this week although witnessed gains on other major currencies. The port deal is expected to cool off USD appreciation for a little while although it is stated that funds will be on piecemeal basis within 12 months.

- GPB has crossed 200 mark again following a correction last week. All EU currencies are on the rise this week.

- Events to look for @ International Stage
> USD - Introduction of tax reform bill /US North Korea Tensions / US Russia Sanctions
> GBP - Brexit Talks Progress / Snap Election (possibility rises due to failing brexit talks) / A second EU referendum
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Re: Global Currencies Update

Postby PAT » Sun Jul 30, 2017 10:02 pm

Thanks V.....
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Re: Global Currencies Update

Postby voight » Sun Aug 06, 2017 9:34 am

Weekly Forex Snap Against LKR- 05/08/2017

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- All major currencies remained flat throughout the week with minor variations.

- JPY and EUR expected to appreciate further against LKR

- USD is likely to depreciate further from current levels by end of Q4
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Re: Global Currencies Update

Postby voight » Sun Aug 13, 2017 10:16 am

Weekly Forex Snap Against LKR- 12/08/2017

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- USD depreciated against LKR this week due to inflows from abroad. This week USD depreciation was due to investors diverting funds from india to SL following RBI decision on interest rates.

- JPY is gaining momentum for the last few weeks and heading towards the 2016 high.
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Re: Global Currencies Update

Postby voight » Sun Aug 20, 2017 10:07 am

Weekly Forex Snap Against LKR- 19/08/2017

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- Not much of a movement this week in currencies. GBP though went through a correction following several weeks of 52 week high.
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Re: Global Currencies Update

Postby voight » Sun Aug 27, 2017 9:08 am

Weekly Forex Snap Against LKR- 26/08/2017

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- LKR appreciated this week against USD and GBP. USD is likely to stabilize between 151-154 range in the short term while GBP is expected to consolidate between 196-202 in the medium term. However close eye in global economic conditions is required.

- EUR gained this week to as investors are betting further EUR surge in the coming months

- JPY remained flat this week. JPY has gained from a low of 1.25 to consolidate between 1.35-1.40 during the past 52 weeks.
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Re: Global Currencies Update

Postby voight » Sun Sep 03, 2017 9:48 am

Weekly Forex Snap Against LKR- 02/09/2017

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- LKR gained marginally this week against USD, EUR and JPY while GBP gained slightly to close the week at 197.85

- USD may get depreciated for a short while as political uncertainity continues at Capital Hill. The US President is threatning for a governement shutdown amid less support for his border wall funding. The US congress has until mid-october to raise the debt ceiling to avoid a default on its debt.
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Re: Global Currencies Update

Postby voight » Sun Sep 10, 2017 10:10 am

Weekly Forex Snap Against LKR- 09/09/2017

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- USD remained flat this week. USD/LKR has somewhat stabilized around this region for a while. Expect movement once we enter the final quarter of the year.

- EUR/GBP and JPY recorded significant gains this week. JPY is waiting to break 1.45 at the moment.
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Re: Global Currencies Update

Postby PAT » Sun Sep 10, 2017 10:49 pm

Thanks voight...
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Re: Global Currencies Update

Postby voight » Sun Sep 17, 2017 11:17 am

Weekly Forex Snap Against LKR- 16/09/2017

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- JPY gain lastweek was short lived as the currency headed towards a correction this week loosing close to 3%.

- GBP surged unexpectedly this week against LKR gaining over 3%, which was the highest weekly gain recorded in a while. GBP has so far gained over 9% YOY.

- EUR is stabilized for the moment arounf 180-185. EUR has gained over 4.3% QOQ and over 12.3% YOY.
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Re: Global Currencies Update

Postby NC+ » Sun Sep 17, 2017 12:01 pm

Thanks voight... You're doing a wonderful job... :-bd
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Re: Global Currencies Update

Postby voight » Sun Sep 17, 2017 8:09 pm

NC+ wrote:Thanks voight... You're doing a wonderful job... :-bd


:D
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Re: Global Currencies Update

Postby PAT » Sun Sep 17, 2017 9:50 pm

Thanks V......
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Re: Global Currencies Update

Postby voight » Sun Sep 24, 2017 9:29 am

Weekly Forex Snap Against LKR- 23/09/2017

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- Good Week for LKR after a while as all major currencies fell this week. Noteable decrease was JPY, as it headed back to 1.36 after a hitting a 52 week high in previous weeks.

- CB has also stated that foreign reserves has increased and this will help the CB to manage the forex more steadily but LKR is still expected to depreciate towards the end of the year.

- Watch for budget teasers from ministers from hereon as the upcoming budget should pave way forward to maintain a balanced and steady fisca policy.
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Re: Global Currencies Update

Postby voight » Sun Oct 01, 2017 9:47 am

Weekly Forex Snap Against LKR- 30/09/2017

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- USD gained marginally against LKR this week while EUR, GBP and JPY lost against LKR for the second staright week.

- Currency watches should keep a close eye on US budget an tax reform plan

- Lifting import restrictions and tax cuts should be closely monitored in LKR budget which is due next month for any possible short term BOP issues within the next six months.
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Re: Global Currencies Update

Postby voight » Sun Oct 08, 2017 9:14 am

Weekly Forex Snap Against LKR- 07/10/2017

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- USD appreciated against LKR marginally while both GBP and EUR fell this week against a defiant LKR. JPY remained flat.

- USD should be monitored closely throughout this quarter as US Fed is expected to raise interest rate in December.

- GBP is expected to be volatile througout next 4 weeks as several members of Tori party are getting close to triggering an automatic leadership contest through backing of 48 Members.
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