Greenback Fails To Rally Further

31 October, 2014

Simon Eastman

Following the announcement from the Federal Reserve on Wednesday that they will be stopping their QE program the dollar made significant gains across all major currencies, as investors pulled out of higher risk assets and currencies like the Australian and Kiwi dollars and plied funds into the safety of the USD. But with a day of few ecostats on Thursday, the dollar failed to make any further gains from the 1.5 cents the day before.

US GDP opened the data flow, which showed an overall annual increase of 3.5 percent compared to 3 percent expected but the monthly rate missed the mark. Couple that with jobless claims posting a higher level of job seekers for the second month running the dollar flatlined. Next up was German inflation which all came in lower than expected, which led the rise of sterling back up against the single currency, but we still struggled to get above key resistance points muting the gains.

Overall, with the UK having no data out at all and expectations of interest rates hiking dwindling, the pound actually lost out against all but the euro and made a modest half cent against the US dollar. Those out there awaiting a return to the levels seen 6 weeks ago will have a long wait and personally I dont think we will see those levels return until well into next year.

Today we close the month with another non-existent day for UK data with only the GfK consumer confidence survey out over night. A flurry of European stats including German retail sales, French inflation, Italian unemployment and inflation figures alongside EU inflation which is the most noteworthy of the whole day. Come the afternoon the US release personal consumption figures and Michigan consumer sentiment index and Chicago PMI so apart from the fact it’s month end and we may see some profit taking it may be a fairly dull day.

In other news, Barclays Bank have reportedly set aside £500 million to cover potential costs from the upcoming investigation into FX rate fixing. There are several banks in the firing line accused of fixing benchmark rates as its rumoured traders used online chat rooms in their planning.

At Currency Index we can fix the rates, not illegally but in the form of a “forward contract”. With a small deposit, you can fix the rate for a larger purchase and set the settlement of that contract to a date in the future, anything up to 12 months. A great tool for any budget planning so if this sounds like a useful option for you, give one of the team a call today.