Forex Weekly Round Up 11 May 2015 – 15 May 2015

US payrolls rebounded in April, a sign companies are confident the US economy will rebound after stagnating early this year. The unemployment rate dropped to 5.4%. The jobless rate fell to the lowest since May 2008 as more Americans found work.

On Wednesday news broke of a disappointing figure from the US, with US retail sales month-on-month coming in at 0%, missing the consensus of 0.2% and a long way from the 0.9% previous. This is now the fifth consecutive miss for US retail sales, and has also pushed the USD index lower to the tune of 0.7% to a 3 month low.

However, in more positive news, fewer Americans than forecast filed applications for unemployment benefits last week, pushing the average over the past month to the lowest level in 15 years and underscoring labour-market strength.

On Monday we saw the Bank of England hold Interest Rates at 0.5% for another month. Due to the Election this announcement was delayed, we are now into the sixth consecutive year with interest rates being this low. The rate has cut return on savings but has benefited mortgage borrowers due to lower repayments.

UK industrial production rose the most since September 2014 as oil and gas extraction surged and manufacturing increased for a second month.

Bank of England governor Mark Carney has suggested he’s in favour of the Tories holding an early referendum on Britain’s membership to the European Union. Carney said that the planned vote on EU membership should be held “as soon as necessary” in an interview on Thursday.

Turning to Europe, the Euro strengthened across the board after Greece made progress on its debt obligations, transferring €750m in debt interest to the IMF – a day ahead of the deadline. However, news emerged on Thursday that Greece was forced to use an emergency account to make their debt interest payment to the International Monetary Fund.

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.