Uncategorized Archives - CAPEX :: CURRENCY

Capex Currency’s Weekly FX Market Insights: America Decides, Trump or Harris

dcapps — Mon, 04 Nov 2024 08:45:53 +0000

Following the market’s disappointment with the first budget of the new Labour government, the value of the pound declined last week in relation to its peers. Now, focus shifts to the Bank of England meeting on Thursday, where a 25 basis point interest rate drop is expected. Any indications of a possible December cut could affect the pound, even though this cut is mainly anticipated. Recent budgetary developments, however, have reduced those odds and given the euro some support.

Last week, the Euro gained ground versus a basket of currencies thanks to encouraging Eurozone economic statistics. Indeed, recent data revealed third-quarter GDP growth that was better than anticipated, which dampened hopes that the ECB would make large interest rate reduction in December. Inflation also increased to 2% in October, which significantly influenced rate-cut rumours. Investors are currently concentrating on forthcoming manufacturing data and ECB officials’ remarks regarding interest rate policy.

The U.S. Dollar weakened following Friday’s disappointing nonfarm payrolls data, indicating a gradual cooling in the U.S. labour market. Adding to this uncertainty, upcoming elections revealed a tight race between Donald Trump and Kamala Harris, with polls closing in before tomorrow’s vote. Moreover, market participants are also bracing for a potential 25-basis point rate cut by the Federal Reserve later this week.

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Capex Currency’s Weekly FX Market Insights: Scare data in the market

dcapps — Mon, 07 Oct 2024 08:20:32 +0000

The comments made by Governor Andrew Bailey of the Bank of England last week considerably tempered investor enthusiasm, causing the British Pound to fall sharply against most of its peers and lose more than 1% vs the Euro and the US Dollar. In the future, a lack of UK data releases could make GBP exchange rates vulnerable to changes in response to a speech that BoE member Huw Pill is scheduled to give. In light of Pill’s comments and Governor Bailey’s remarks from last Thursday, Sterling may continue to weaken and conclude the week behind its competitors.

Last week, the Euro tripped out of the gate after lower-than-expected inflation data for Germany and the Eurozone were released. In fact, as speculation about a second ECB interest rate decrease later this month intensified due to the lacklustre inflation data, the euro fell to a 29-month low versus the pound. However, ECB Vice-President Luis de Guindos’ warning of possible negative consequences to the Eurozone economy has kept pressure on the bloc’s single currency high.

After posting significant gains last week, particularly in the wake of Friday’s payroll report, the US dollar did not move much in early European trading this morning. The reading cooled concerns about a potential downturn in the US economy and strengthened the argument that the Fed won’t need to drastically lower interest rates to boost the economy. In November, investors were observed pricing in a 90% chance of a 25-basis point drop and largely wiping out bets on another 50-basis point cut.

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Weekly FX Markets Insights: Market scales back expectations

dcapps — Mon, 08 Apr 2024 08:58:08 +0000

The British Pound went down at the conclusion of last week due to a lack of UK economic data, leaving the currency rudderless. In fact, without any basic drivers, Sterling fluctuated widely and lost ground to its competitors. Looking ahead, the British Pound begins the new week under pressure as investors expect the Bank of England to lower borrowing costs as early as June, citing indicators that inflation is slowing.

The Euro continues to fall as pressure mounts on the ECB to lower high interest rates as economic growth remains anaemic and inflation falls closer to target. However, Thursday’s ECB monetary policy meeting is virtually certainly going to end with no change in interest rates. Nonetheless, senior governing council members have expressed a preference for June as the ideal meeting to begin a controlled rate-cutting cycle.

The US dollar rose on Friday and held steady in early European trade this morning, as a strong nonfarm payrolls report caused investors to drastically reduce their expectations that the Federal Reserve will lower interest rates in June. Looking ahead, March inflation data and the Fed’s March meeting minutes are both due on Wednesday. Both are anticipated to provide additional clues after a wave of officials warned that the bank was not in a hurry to cut rates.

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