Week Ahead Election Looms

Last week saw a significant sentiment change on the markets with first the Dollar and then Sterling falling foul of poor data, allowing the previously ailing Euro to gain significantly. The week ahead is dominated by the UK general election on Thursday, and with the Pound seemingly succumbing to pre-election jitters, coupled with the aforementioned poor data, rates are most definitely on the slide.

Various newspaper reports have suggested that the election will bring significant woes for Sterling – with an article a couple of weeks ago in the Daily Mail – Mail Article – going so far as to suggest drops of as much as 10%. Here at Currency index we have been warning of this for some time and thankfully many of our clients have been able to secure their rates using forward contracts – if you have not as yet, then it is well worth speaking to your account manager to discuss how you could avoid this potential roller coaster.

There is various other data out this week:

Tuesday
European PPI
US Services PMI
US Non-manufacturing PMI
New Zealand Unemployment

Wednesday
European Services PMI
UK Services PMI
European Retail Sales

Thursday
UK General Election
Australian Unemployment
UK House Prices Survey
US Jobless Claims

Friday
Australian RBA Policy Statement
UK Trade Balance
US Non-Farm Payrolls
Canadian Unemployment

If recent trends continue then there are plenty of potential pitfalls for Sterling and the Dollar here, with a couple of fairly low key opportunities for the Eurozone to continue proving that things are improving for the single currency bloc.

For those with an Antipodean interest in the currency markets, there is also plenty of note in the above list. Overnight we have seen the Reserve Bank of Australia cut interest rates from 2.25% to 2.00%. Initially, as one would expect, this caused a sharp decrease in the value of the Aussie Dollar, but it quickly rallied, following a surprisingly positive statement from the governor, and is now actually a cent better off then it started against the Pound. The RBA’s policy statement later this week, will give further clues, so watch this space if you have an upcoming transfer down under.

As ever if you have an upcoming currency requirement, then stay in close contact with your CI account manager, to be kept abreast of exactly what is happening and how it is likely to affect your money transfer overseas.