IMF state Yes Vote will bring market negativity

Thursday was a fairly quiet day for the currency markets with little movement to talk of. We only had a few EU ecostats in the morning with German and French inflation figures early doors, followed by the ECB monthly report giving the markets the only news to trade off. With all figures coming out as expected the euro made some initial gains against the pound and US dollar but the gains were limited.

Two currencies which the pound made steady ground against over the course of the day were the Canadian and Aussie dollars. For the Loonie, poor house price data didnt help while down under the previous night some initial positive data with regards to employment gave the Aussie a boost but then it subsequently lost all these gains. This is most likely down to the fact that China posted poor inflation figures much lower than expected, and being the largest economy in the Asian-Pacific region and a key importer of Australian goods and services this often has an effect on the antipodean currencies. Pound/Aussie rates dropped 1.5 percent over the day making that property on the Gold Coast considerably cheaper.

Amid a day of more media coverage of the Scottish referendum it was, as mentioned a pretty range bound day for sterling which started to make gains against the euro and US dollar but as the day came to an end, lost all gains again. With little of note out for the UK again today, Friday is going to be led by ecostats from elsewhere.  Italian and Spanish inflation figures released early on, followed by EU employment data mid morning will guide sterling/euro, whilst after lunch import/export indices and the key retail sales will rule the greenbacks direction. The US dollar is ruling the roost with investors at present so keep in touch with the CI team if you have a currency trade to make to avoid any surprises.

As vote day looms, we will undoubtedly have more news on the polls over the weekend surrounding the referendum, which to quote the IMF yesterday “a Yes vote could lead to negative market reaction in the short term”. We have already seen negative market reaction from the pound, so it may be prudent to consider fixing your rate now to avoid falling foul of any further negative movement in the run up to the vote.