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Daily FX Market Commentary 18/02/2016

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The USD

Well, yesterday the US produced some information showing the change in prices for producers in their economy and this showed some positive signs for them. Despite this the GBPUSD did, really, precisely not a lot. The top of the day was around the 1.4330 mark and the lowest was in the region of 1.4270 and the rate as I write this morning is 1.4284 so all in all a pretty quiet day.

This means that, still, the risk of the currency pair darting either way remains in my mind. As buyers and sellers decide which way the value of the currencies are to go we often see the movement of the rate slow down like this.

There is still more news this morning regarding the likelihood of the US to raise interest rates according to the programme that they laid out when making their first move in 8 years. The undercurrent of those warning that their economy is growing too slowly and their is too much unsettlement will mean that long term, the USD might struggle to maintain it’s momentum.

Look out today, too, for some employment data around 13:30 – jobs data and elections are close buddies and so tend to get more emphasis when politicians are involved.

 

The EUR

There was only tidbits of news from the Eurozone yesterday, among them a figure designed to show how much output the construction industry has, and this has shrunk a little across the whole area.

Of course, there are numerous articles closely following Brexit and the European Union and these really will be long term, significant factors that investors will need to interpret and analyse as more information becomes clear.

As it stands, so much is left to happen in that vein and all that we have to go on is political pushing and pulling.

The European Central Bank (ECB) will meet today to discuss ways to continue their course or design new tactics to meet their overall aims. Remember, the President of the ECB has said that he views the speed of pushing money into their economy as a problem and also wants to make sure that demand strenthens. This may move the currency a little – if he says things that help these factors, it’s good for the EUR and vice versa.

 

The GBP

After a surge against the Euro early in the morning yesterday, the Pound settled down and really didn’t move a lot during the course of the day against either of it’s two main trading partners, the Euro and Dollar.

While we didn’t achieve the forecast unemployment rate of 5% (we came in at 5.1%) there was still plenty to grin about. The number of unemployed people is the lowest since records began.

We touched yesterday on there being two factors at play yesterday, and that did prove to be the case as the increase in wages is so important. This proved to shrink and so balanced out the news. It’s not really all that bad as, when lots of people are employed, it puts natural pressure on wages – so we may well see a natural adjustment in the future.

So, if I was a betting man (and remember this is expressly my opinion) what would I think would happen today? I think we might see the Pound gain back some ground against the EUR and USD during the day today, but not by a lot.