Forex Weekly Round Up 1 June 2015 – 5 June 2015

The US economy contracted in the first quarter as it buckled under the weight of unusually heavy snowfalls, a resurgent dollar and disruptions at West Coast ports, but activity has rebounded modestly.

A UK Manufacturers group (EEF) lowered their 2015 manufacturing output growth forecast to 1.5% from 1.7%. The pound lost ground on Monday against all of its major counterparts.

Thursday saw the bank of England Keep its interest rates on hold in the face of mixed signals about the strength of the UK’s recovery. The Bank’s nine-member Monetary Policy Committee voted unanimously to leave the rate where it has been for the last six years.

The Euro significantly strengthened during Tuesday’s session after Greek Prime Minister Alexis Tsipras said he had issued “a realistic proposal” to the country’s international creditors in an attempt to secure a deal over its debts.

However, on Friday, we learned Greece confirming they will not be making the €300 million payment to the IMF as they have found a loop hole that allows them to bundle the whole of June’s four payments together as one €1.6Bn payment at the end of the month.

After leaving interest rates at a record low 0.05%, the ECB raised its inflation forecast to 0.3% for this year, having previously put it at zero. They stated that its trillion-euro-plus asset-buying programme was paying off earlier than forecast, but had to be seen through.

Analysis of the markets for 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.