Forex Weekly Round Up 26 January 2015 – 30 January 2015

Inflation dropped to the joint record low of 0.5% in December, driven by cheaper food and fuels. The expectations are it will fall below zero in early 2015.

The Pound reached a seven-year high after investors responded to Mario Draghi’s plan to stoke the Euro zone economy by selling the Euro. This brought mixed news for Brits. The possibility of a cheap holiday is attractive but brings a tougher climate for British exporters.

On Tuesday we learned the Indian Rupee reached close to its highest level since November. With India heavily dependent on oil imports, the current record low oil prices are providing a welcome boost to their economy and strengthening the Rupee.

The UK economy ended 2014 with its best year since 2007. The economy grew 2.6% in 2014. Despite growth being less than forecast, this is the eighth straight period of expansion and the best year since 2007.

Wednesday’s market news also showed US consumer confidence improved significantly in January, hitting the highest level since 2007. It now stands at 102.9, up from 93.1 in December.

Low investor confidence was reported in the Eurozone. Greece’s new leaders began to scrap measures that were planned as conditions of the country’s bailout package. The new government said it would reverse privatisation and re-hire some public sector workers. As a result, the Athens stock market plunged by 9%.

UK 10-year bond yields fell to a record low of 1.402% today, as investors rushed to plough cash into the bonds – regarded as ‘safe’.

Over in the US, the labour market received good news when the jobless figures were released. US initial jobless figures fell sharply to 265,000, the lowest level since 15 April 2000.