• Focus today is US Core PCE at 13.30pm
• Egg nog and Christmas pudding

Market overview

Just as most people wind down going into Christmas the foreign exchange markets wind up for two days of data packed carnage. We have 12 significant releases of note over the next 2 days and, with a lot of traders knocking off this week after squaring up their books for year end, anything can happen over the next few days so “BE AWARE”. The focus today is on US Q3 GDP growth and the core personal consumption expenditure (PCE) which is expected in at 2.2% and which is also the Federal Reserves preferred inflation gauge. The Japanese Yen continues to suffer on the back of Governor Fukui’s comments earlier in the week which failed to support an interest rate hike in January and sees the Yen at it’s weakest against the Euro, GBP and AUD for 8 years. In the UK this morning we have very important Q3 GDP and the Q3 current account figures.

Currency - GBP - Canadian $

GBPCAD has topped out at C$2.27 after being hugely overbought in December. This has been a fantastic opportunity for CAD buyers and well done to all who bought at these 18 month highs. A corrective fall below C$2.20 is now likely. Most of the bad news on the economic front in Canada has been factored into the 10% depreciation the CAD has suffered in Q4. The slower US economy has helped push GBPCAD higher as 80% of Canadian exports are destined for the US, so a weaker US economic picture spills over into weaker Canadian trade figures and export growth.

Currency - GBP - New Zealand $

NZ GDP growth data released yesterday disappointed the markets, coming in at half the forecasted 0.6% for Q4 and at +1.4% is the slowest pace in 7 years. This makes it difficult for the Reserve Bank of New Zealand to hike interest rates even with inflation above target. Earlier in the week the NZ current account deficit for Q3 was significantly better than expected and helped push the Kiwi Dollar to 11 month highs against the USD at $0.70. The risk for Kiwi buyers is a break below NZ$2.80 support as the NZDUSD exchange rate guns for $0.72. Just to prove that global weather patterns are completed messed up, there is a chance of snow in NZ for Christmas…and I still remember drinking Champagne on the deck on 25C+ Christmas days?

Thought for the day

The Supreme Court has ruled that they cannot have a nativity scene in Washington, D.C. This wasn't for any religious reasons. They couldn't find three wise men and a virgin.

Jay Leno

Find out how to get the best deals for your currency exchange - Don't pay over the odds with the banks!

FX Research and Analysis undertaken by:
David Johnson - Halo Financial