Forex Weekly Round Up 19 January 2015 – 23 January 2015

On Monday we learned the cost of living in the US had declined by the most in six years. This was a reflection of the lower energy costs that are keeping inflation from rising. Also, consumer confidence jumped in January to an 11-year high; fuelled by steady jobs growth and falling gas prices. The Consumer Sentiment Index rose to 98.2 from 93.6 in December. The rise to 98.2 is the highest the Index has been since January 2004.

Tuesday brought news that Denmark’s central bank had cut interest rates by 0.15% to -0.2% in an effort to slow down the gains the Krone made against the Euro.

The Dollar strengthened after China announced its economy had not slowed as previously feared. The Chinese economy grew 7.4% in 2014, just missing the official forecast of 7.5%.

Wednesday brought the highest German investor confidence in 11 months, as the European central bank prepared for its quantitive easing programme.

US homebuilder confidence was down by one point to 57. Readings above 50 show builders are optimistic about sales and January marks the seventh consecutive month the index has been over 50.

Our market report on Thursday showed the Pound weakened as the Bank of England Monetary Policy Committee made its first unanimous decision on interest rates since July. Martin Weale and Ian McCafferty dropped their vote for an interest rate rise. In more positive news, UK unemployment dropped to a six-year low of 5.8%. The forecast drop from 6% was to 5.9%.

The Euro strengthened on news there would be €50 billion each month until the end of 2016 in quantitive easing but the early gains were lost during trading later in the day.

On Friday we learned the actual scale of the quantitive easing programme – €60 billion each month. This was much higher than expected and brings the total programme to €1.26 trillion.

The Dollar strengthened despite uncertainty in the market and disappointing jobs figures in the US.