- Improving Eurozone data not yet reflected in Euro's value
- German IFO report is today’s highlight
I have it on good authority that the Royal Family will not be
involved in the planned protest against the Iraq war outside Downing
Street but they must be keen for the troop reductions to start before
Second Lieutenant, Harry Wales gets on the Hercules transport plane.
Mind you, at least Harry has somewhere to wash and change out of his
uniform which is more than you can say for most nurses and doctors; no
wonder cases of MRSA and C difficile are rife.
As for the currency
market, well it’s pretty quiet really. Yesterday’s Eurozone industrial
orders report was upbeat and French business confidence grew last month
but, on the negative side for the USD, US jobless claims grew as well.
One might expect some Euro strength and a tad of US Dollar weakness as
a result and, frankly, one wouldn’t be disappointed by the market
movement. (Crikey look what happens to one’s writing style when one
mentions the royal family). Anyway, today will provide few reasons for
any excitement with just the German IFO report and UK economic growth
numbers to hang our hats on. We will, however, have a speech from the
president of the Federal Reserve Board of San Francisco later this
evening which will be closely followed for interest rate hints.
And then the weekend arrives; bringing with it some enthralling 6
nations clashes. I can’t wait for the Rugby but must say, in spite of
the relentless television coverage I have no real interest in luvvies
slapping each other on the back in America and thanking a cast of
thousands in their speeches. Perhaps I am alone in having zero interest
in watching the Oscars but good luck to Dame Helen and the other Brits
anyway.
This morning’s German IFO report showed a small but significant
reduction in business optimism which is at odds with yesterday’s
reported upturn in industrial orders across the Eurozone.
Understandably, the Euro weakened a tad on the news and GBPEUR
continues to bounce from the low seen on 19th February. With the
momentum indicators pointing upward, it looks set to test the underside
of €1.4950 before any further downward momentum is seen. The upward
trend which started back in July 2006 remains intact even after being
tested on 5 occasions but sooner or later, that will give way and,
after this next bounce, I wouldn’t be at all surprised to see a test
below this line as far as perhaps €1.4650. So taking advantage of this
next bounce is the ideal scenario for anyone with Euros to buy.
Wednesday was a big day for South Africa; Finance Minister, Trevor
Manuel announced the first budget surplus - equivalent to US$1.5
billion - and an impressive increase in spending plans including the
huge building project for the upcoming Football World Cup. He forecast
that, for the next three years, the South African economy would grow at
similar levels to the current 4.9 percent rate. The Rand failed to gain
as heavily as we thought it might because so many traders in the bond
and currency markets had
already factored in all the good news. However, South African equities
markets did rather well and the inflows of investment funds ahead of
the World Cup should start a general trend of Rand strength. The
immediate obstacle to a sharper fall in GBPZAR is a support level at
ZAR13.70 which was tested this week but held up to the Rand buying. If
this gives way, a drop to ZAR13.20 is a distinct possibility and a
lower level of GBPZAR is something we will almost certainly have to get
used to.
if the nation were a person, we would be sectioned.
India Knight
(Originally written in a Times article and seen on an advertising poster this morning for a product I can’t remember)
FX Research and Analysis undertaken by:
David Johnson - Halo Financial
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