Have The Tables Turned

22 July, 2015

Simon Eastman

Yesterday we saw the euro make significant gains against its major pairings including the pound and US dollar.

The rally came off the back of reports that Greece had stated they want a final conclusion to talks by the 20th August, as it presented parliament with another round of legislation drafts on proposed reforms needed to secure the bailout funds. Today they meet again to decide on another set of reforms which will again see Prime Minister Tsipras’ authority come under further testing, after the rebellions seen last week. These reforms need to be passed in order to receive the €86 billion required over the next 3 years.

The result was a 2 cent gain for the euro against the pound and a one and a half cent gain against the US dollar, which remains the front runner for investors as fresh talk of interest rate rises has been heard recently.

Overnight Australian inflation figures came out hitting expectations, leading to some short term selling pressure as the Aussie lost another cent to sterling although the gain was short lived. The Aussie has been increasingly under selling pressure recently with a raft of interest rate cuts, poor data and the proposal of introducing QE. This is good news for anyone looking to emigrate down under, but for the many clients we have seen recently coming back the other way, this is troubling as the value of their savings is dwindling seemingly by the day. If you have dollars to sell, get in touch with one of the team today to discuss your options.

So onto today and it’s another key day for data as we see the UK Bank of England minutes released at 9.30am this morning where investors will be keen to see whether any of the MPC members had chosen to vote for a rate hike. This is more pertinent following recent comments by Governor Mark Carney last week suggesting they have been eyeing the first rate rise here for early next year. Also key to this will be the inflation hearing later this morning at 10am.

Across the pond we see a few low key releases from the States including mortgage data and house sales while as mentioned, today Greece will be voting again on another round of reforms. Finally this evening its back down under to focus on the Kiwi dollar as the RBNZ deliver their interest rate decision and subsequent policy statement.

Plenty to go on, so should be another busy day on the currency markets so if you have a transfer to make, contact one of the CI team today for some friendly guidance on the options available to you to reduce the potential pit falls.