Currency Watch: a calm week for world markets

We are still waiting on the level of participation in the Greek debt swap to be made public. However, aside from some wobbles at the beginning of the week, no real fears have been evident that suggest it will not go to plan.

Data from the Eurozone has been poor of late, however, with PMI surveys from the continent adding weight to our belief that the recession in the Eurozone will not be merely technical, but that it could be more protracted.

Wednesday’s German factory orders were horrific, and they point to a real slow down in the factories of the Rhine – this correlates attractively with a falling euro, so further gains for the pound against the single currency could well be around the corner.

In the UK, the Bank of England decided to stick and not twist on either interest rates or QE. The Bank has decided to sit on its hands, for now. No change was expected this week, but the uncertainty surrounding what the MPC will do next is very real. The market is still not expecting any rate movement until at least next year, but committee debate on whether to add further asset purchases will increase through Q1.

Inflation remains above target levels in both the UK and Europe and expectations of price rises as a result of oil price increases are also moving higher. Interest rate cuts or further monetary policy loosening may need to wait as a result, although I believe we have seen a peak level in oil markets barring any actual conflict with Iran.

The end of the week also means a new publication of releases that have helped risky assets onward; US jobs numbers. The latest ADP employment report for February showed an expansion of 216,000 jobs and a similar increase is expected to show in this afternoon’s government jobs report. The saying always used to be that “if America sneezed then the world would catch cold”; the hopes are that the improvement in the US jobs market provides the opposite impact and warms the world economy instead.

Jeremy Cook is chief economist at World First foreign exchange

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

We encourage debate in the comments section and always welcome feedback, but if you spot something you don't think is right, we ask that you leave an accurate email address so we can get back to you if we need to.

Subscribe to our newsletters

Key Account Manager

MMI Maldives

Financial Controller

London City Bond
Barking, UK

Duty Manager

The Whisky Exchange
Great Portland Street, London

Spirits Advisor

The Whisky Exchange
London, UK

International Sales Manager

Elixir Distillers
Park Royal, London, UK

Brand Marketing Executive

Elixir Distillers
Park Royal, London, UK

Cellar Door Manager

House of Townend
Melton, North Ferriby, UK

Marketing Manager

The Whisky Exchange
Whitby Avenue, Park Royal, London NW10 7SF

Millésime Bio 2020

27th Jan 2020

Maisons Marques et Domaines Annual Tasting

London,United Kingdom
29th Jan 2020

Austrian Wine Tasting

London,United Kingdom
3rd Feb 2020
Click to view more