Forex Weekly Round Up 9 March 2015 – 13 March 2015

US employment was up in February as the jobless rate fell to a 6.5 year low of 5.5%. These changes could encourage the Federal Reserve to consider increasing interest rates in June.

According to the British Retail Consortium UK retail sales increased 0.2% on a like-for-like basis compared with February 2014. Overall sales were up 1.7%.

We learned that France has been granted a 2-year deficit extension. This is the third extension France has been granted since 2009 to bring its budget deficit below 3% of GDP. France’s budget deficit is expected to be 4.1% of GDP this year, because it is struggling with high unemployment.

The pound hit its lowest level against the dollar in 20 months, fuelled by a growing expectation that US interest rates will rise in June. The dollar has gained more than 10% against a range of six currencies so far this year, first and foremost by its rise against the euro. These changes are lining up the dollar for its best quarterly performance since 1992.

Mark Carney sought to allay fears that Britain faces a 1930s-style deflationary spiral after inflation fell to 0.3% last month. He said that the strength of the UK recovery meant inflation would return to its 2% target within the next two years.

Our analysis of the coming week is continued weakness in the euro and continued strengthening of the dollar. Weakness in the Euro is good for those who are buying euros and dollar strength is better for those exchanging dollars into pounds. The currency markets are liquid and volatile, however, 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 to get more information on how we can help you do this.