Forex Weekly Round Up 20 April 2014 – 24 April 2014
Monday brought news that Britain’s economy created the largest number of new jobs in nearly a year and unemployment hit its lowest rate since mid-2008. This market data came from the last such report before what will be a closely fought election on 7 May.
The Bank of England Monetary Policy Committee announced a unanimous decision to keep interest rates unchanged at 0.5%. The key announcement was all of the members deciding that the next interest rate adjustment would be to the upside, eliminating concerns over interest rate cuts due to low inflation. These comments caused a sharp rise of the Pound, which gained over 1% against both the Euro and the Dollar.
Also on Monday, the US Dollar managed to make gains against most of its counterparts; however, this seemed to be more sentiment based, as there was a lack of data released from the US.
The Dollar weakened on Thursday after unemployment claims came out above forecast, despite remaining below 300,000 for seven weeks straight.
The German economy expanded 0.5% in the three months through March and will continue to grow at that pace in the remaining quarters of the year based on forecasts.
Thursday saw the Euro fight back in the afternoon after French and German manufacturing came in significantly below forecast first thing in the morning. Both figures signaled an easing in the rate of growth of private sector output to near stagnation in April. Analysts believe this weaker Euro-zone expansion is a sign that bond purchases by the European Central Bank will take time to bring about a fragile recovery.
Our analysis of the markets in the next three months is further weakness in the Euro and strengthening of the Dollar. Weakness in the Euro is good for those who are buying Euros and Dollar strength is better for those who are selling Dollars. The currency markets are liquid and volatile, so we may see movements outside this pattern.
Those looking to buy Dollars and sell Euros should consider a forward contract to hedge against adverse movements in the long term. Please contact us for your free, no obligation FX comparison.