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Weekly Update | Currency insight from Excel Currencies |
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| Written by Dan Waterman September 23rd, 2024 |
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The Pound gains a huge 3% in just 5-weeks versus the Euro & US Dollar..
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| Let's put the Pound's recent domination into some perspective..
Someone who is purchasing a holiday home in Spain for say €200,000, has just knocked £5,000 off the price of their property in 5-weeks by doing nothing
A company that imports its products from China once a quarter for say $200,000, has just made £4,500 profit in 5-weeks by doing nothing
These are crazy huge gains from doing nothing and so if you haven't already banked this profit by utilizing either a normal SPOT trade or by hedging some of what you need now or by locking in everything you need for a set period of time with a Forward Contract, I would love to know why not?!
If you are waiting on GBP v EUR to hit 1.20 mid-market (not the rate you can achieve, but the rate banks and us buy at), are you doing it just because it sounds good or because your hunch says it will get there and beyond?
1.20 is a formidable psychological barrier in the FX market. The last time the pair was trading at 1.20 mid-market was between January to April 2022 and it didn't last for more than 5-days at a time above the 1.20 mark. Notably though, 1.2150 was the highest point it hit during that time.
Apart from a couple of days in February 2020, the last time GBP v EUR was comfortably trading above 1.20 was back in 2016. The lowest the pair had been during that time-frame was 1.07..
EUR The ECB may need to consider speeding up the pace of rate cuts after the blocs latest PMI readings. An overall figure of 48.9 is a serious blow and deepens the economic slowdown the area is currently facing.
Any reading below 50 signals an economic contraction and seeing as 50.6 was expected (down from 51 last month) this was a huge miss. Germany remains in a chronic condition with all areas slumping and France's economy has been flattened this month after hosting the Olympic games just last month.
de their decision last week on interest rates and so the Euro will be waiting in the wings this time out on the result of the Fed's & BoE's decisions. A 25bp cut arrived (which was expected) and the narrative that followed was that the central bank were in no rush to deliver a cut at the next one.
A slow and steady approach from here would point to a 25bp rate cut per quarter, which if true, underpins the Euro at current levels and raises its safe-haven profile.
USD The US offers the only major thing of note this week with its GDP & PPI readings. But the damage has already been done to the Dollar, after the Fed announced a 50bp rate cut as opposed to a more expected 25bp cut last week. With the BoE not cutting its interest rate the day after, it meant the right call for those who chose to 'sit on their hands' as we suggested to do before the two outcomes.
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Expected mid-market ranges for September 23rd 2024 | | |
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Upcoming Data | Monday 23rd September 2024 | 14:45 US - PMI
| Tuesday 24th September 2024 | 14:00 US - House price index 15:00 US - Consumer confidence |
Wednesday 25th September 2024 | 07:45 US - French consumer confidence 08:00 EU - ECB Non-monetary policy meeting 12:00 US - Mortgage applications 13:30 US - Building permits 15:00 US - New home sales |
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| Thursday 26th September 2024 | 08:00 EU - Spanish retail sales 09:00 EU - Italian business & consumer confidence 09:00 EU - Euro-Zone economic bulletin 13:30 US - Initial/continuing jobless claims, durable goods & GDP 14:20 US - Fed Chair Powell speech 14:30 EU - ECB President Lagarde speech 15:00 US - Pending home sales 15:15 EU - ECB's De Guindos speech 21:30 US - Fed balance sheet |
| Friday 27th September 2024 | 07:45 EU - French CPI 08:00 EU - Spanish CPI 08:55 EU - German unemployment rate 13:30 US - PPI, personal income/spending, retail & wholesale inventories
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