Dollar making hay

31 March, 2015

Tom Arnold

A relatively quiet week on the markets kicked off yesterday with the Dollar continuing last week’s resurgence, Sterling struggling and the Euro struggling even more.

The Pound took a bit of a hit yesterday thanks to the official start of the general election campaign. As we watched the Prime Minister disappear into Buckingham Palace to inform the Queen that Parliament had been dissolved, we also watched the under pressure Pound start to slide away across the board. The markets do not like the political uncertainty one bit, and the Pound is unlikely to find any favour in the coming weeks as a result. On the data side, we have the last revision of 2014 Q4 GDP this morning and a couple of other smaller releases. Any surprises on GDP could spell movement for Sterling, but the news in the coming weeks will be dominated by the polls, with only really inflation and therefore interest rates standing any chance of drawing analyst’s attention.

The Euro continues to struggle significantly with the Greek situation very much still top of the agenda. The reform plan submitted by the Greek leader in the last couple of days has been rejected by the Greek’s creditors and therefore the chance of Greece running out of money is once again right to the fore. George Soros was quoted as saying in the last few days that he believes the chances of Greece coming out of the Euro are now as high as 50/50, and hence the Euro is significantly on the back foot. Today sees German and overall European unemployment and European inflation releases. All could have an impact if the expected slight improvements don’t come to pass, but without a big surprise, it is unlikely anyone will notice while the Greeks continue to scrabble around for money.

The Dollar is still riding the very positive data from the end of last week, and is also taking advantage of a weaker once again Euro, to reassert itself at the top of the investor’s wish list. With talk of interest rate rises in the not too distant future, backed by continuing positive data, anyone with a Dollar requirement should probably be considering cutting their loses. There is a reasonable amount of US data this week too, with US consumer confidence and an FOMC member speaking today, mortgage data, manufacturing PMI and another FOMC member speaking tomorrow, and critically non-farm payrolls on Friday. A big release like that with most other markets closed for Easter could see a significant opportunity for the Dollar to move, so any Dollar requirements should definitely be analysed before you crack open any Easter eggs.

As ever make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and how it is likely to affect your upcoming currency requirement.