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Halo Financial - International Money Transfers, Battersea Studios 2, 82 Silverthorne Road, London (2026)

02/09/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

Euro vulnerable after softer inflation
It was confirmed on Friday that eurozone consumer price inflation slowed to 2.2% in the year to August. That is within the European Central Bank's target range and nearly down to their 2% target. That has inevitably led to increased expectations that the ECB will cut their interest rate again on September 12th. Some of the reason for the drop in inflation is undoubtedly the poor performance of Germany’s manufacturing and industrial sectors. We will get a further taste of that today with Purchasing Managers Indices being delivered for both German and eurozone manufacturing sectors. The forecasts are for relatively stable survey results but all on the negative side of the neutral reading in these surveys which is 50. The last rate cut and the 1st of this cycle, happened in June. The financial markets have mixed views on how many interest rate cuts from the ECB and how rapidly they will be delivered. As at this morning, in the interbank market, the GBP/USD rate is trading at EUR 1.1880 and the EUR/USD rate is a tad lower at USD 1.1060. It is a US public holiday today, which will either make the afternoon session very quiet or could cause volatility in the thinly traded foreign exchange market.

Holiday ahead of probable BOC rate cut
Like its southern neighbour, Canada has a Labour Day holiday today. The Canadian dollar made nearly a cent in gains against the pound on Friday but is gently giving up those gains today. That is largely due to speculation over whether the Bank of Canada will cut the base rate by 25 basis points when they meet on Wednesday. It appears to be largely accepted that they will, bringing their base rate down to 4.25%, two days before Canada publishes its employment data for August, which is likely to reflect a small rise in the unemployment rate to around 6.5%. As will ever be the dilemma for central banks, leave your interest rate cuts too late and you damage any growth there is in the economy but cuts too early or too fast and you stimulate further inflation, leading to higher interest rates at some point in the future. Right now, in the interbank market, the GBP/CAD rate is steady at around CAD 1.7725.

Today's Major Economic Releases
01:45 CNY Caixin Manufacturing PMI (Aug)

16/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

Sterling up on strong retail sales
UK retail sales grew by 1.4% in the year to July; a substantial improvement on the 0.3% drop in the year to June. Core retail sales also grew by 1.4% in the same One year period. These numbers were largely in line with the market forecasts but, coming after yesterday’s solid UK GDP numbers they have instigated some GBP buying in the market. In the interbank market, GBPUSD is back up to $1.2875 and GBPEUR is comfortably above €1.1720. We have no expectation of further UK economic data today next week is largely dominated by purchasing managers indices, so volatility is likely to be unpredictable.

Soft service sector report causes further JPY selling
In the two weeks since the Bank of Japan dropped in an unexpected interest rate hike, we have seen the initial knee-jerk reaction of significant Japanese yen strength and a gradual weakening of the yen from JPY 180 against the pound to around JPY 189 as at yesterday. We saw the yen lose another three points overnight to around JPY 192 after the tertiary (service sector) data showed a sharp 1.3% decline in July. Part of this overnight rise can be attributed to strong UK retail sales data but we haven't seen that replicated in all other currency pairs, so there is no guarantee this is the cause of the bounce. There are a number of commentators who believe the Bank of Japan will introduce another interest rate hike in October and, if that belief grows, this is likely to support the end and perhaps keep the GBP JPY rate around JPY 190.

Today's Major Economic Releases
06:00 GBP Retail Sales (MoM) (Jul)
14:00 USD Michigan Consumer Sentiment Index (Aug)

Currency Insight by Halo Financial Founding Director, David Johnson

15/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

JPY levels off after strong GDP data
Japan's economic growth rate stepped up in the second quarter of the year. In the data released this morning, annual growth came in at 3.1% in the month to June after quarterly growth of 0.8%. Both figures were significantly smaller than the market forecasts. Understandably, the Japanese yen, Which had been weakening after the surprise interest rate rise from the Bank of Japan caused a major spike in its value, has levelled off. The GBPJPY rate is hovering just below JPY 190 and the USDJPY rate has dropped a point to JPY 147.15.

GBP benefits from Industrial production uplift
This morning's UK economic growth data was very much in line with expectations. Quarterly growth of 0.6% in Q2 produced an annualised growth rate of 0.9%. These were precisely what the markets had predicted. However, monthly growth of 0.8% in industrial production in June was way above the market forecast of 0.1% and significantly better than the May figure of 0.3%. Manufacturing production was also very strong in June, with monthly growth of 1.1% against an expected 0.1% that has brought some GBP buyers out of the woodwork and the pound is up to USD 1.2850 and EUR 1.1665.

USD paused ahead of a slew of data
Yesterday's US data was entirely in line with expectations and therefore the data failed to move the US dollar. This afternoon's results may be different; retail sales data can be unpredictable and we will also see US industrial production, as well as a pair of manufacturing surveys. Throw in the weekly jobless claims numbers, which have been improving, and the scene is set for volatility. The USD starts the day at $1.2850 against the pound and $1.1010 against the euro.

Today's Major Economic Releases
01:30 AUD Employment Change s.a. (Jul)
01:30 AUD Unemployment Rate s.a. (Jul)
02:00 CNY Industrial Production (YoY) (Jul)
02:00 CNY Retail Sales (YoY) (Jul)
06:00 GBP Gross Domestic Product (Q2)
12:30 USD Retail Sales (MoM) (Jul)
12:30 USD Retail Sales Control Group (Jul)

Currency Insight by Halo Financial Founding Director, David Johnson

14/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

Surprise RBNZ rate cut weakens NZD
In delivering a surprise 25 basis point interest rate cut, Reserve Bank of New Zealand’s (RBNZ) Governor Adrian Orr issued a very dovish statement, confirming that the committee considered a 50 basis point cut as well. He also confirmed that they all felt inflation was back within its target range and they feel confident that NZ is moving into a period of low and stable inflation. The unexpected move caused the GBP/NZD rate to spike from around NZD 2.1150 to NZD 2.1415 before settling back to NZD 2.1335 at the UK open. The release of softer-than-expected UK inflation data was partly to blame for the later correction.

UK inflation ticks up less than forecast
What we used to call the cost of living index and is now known as the consumer price index rose by 2.2% in the year to July with the core inflation, excluding the more volatile elements including of energy and food, rising 3.3% on the year. Both of these indices were 0.1% below the market expectation and well within the bounds of the Bank of England's target range. There had been some suggestions around the market that the figure would be higher than this and that would explain the 3rd of a cent drop against the US dollar to this morning’s rate of USD 1.2840. And the similar drop against the euro to bring the GBP/EUR rate down to EUR 1.1670 this morning. That dip is also reflected in the GBP/AUD rate – down to AUD 1.9340 this morning and the GBP/CAD rate, CAD 1.7595 at the time of writing. There is no further UK data today but we have a slew of data early tomorrow morning which includes UK GDP growth for the second quarter of the year. The forecasts for this are very mixed but a slightly softer growth rate than the Q1 figure of 0.3% is the most likely outcome. Another little dip in the value of the pound is likely if that is proven to be true.

USD steady ahead of inflation data
This afternoon brings a bundle of US data for dollar traders to ponder. Within that will be the consumer price index, which is forecast to have softened to 3.2%, still just above the Federal Reserve's target range but moving in the right direction And that would see calls for further interest rate cuts. We will also get the US crude oil inventories; a bellwether for the amount of activity in the US economy and one that is watched very closely by the US central bank. As at this morning, The US dollar is relatively calm at $1.2840 against a slightly weakened pound but the EUR/USD rate has pressed up to $1.1000 overnight ahead of eurozone economic growth data.

Today's Major Economic Releases
02:00 NZD RBNZ Interest Rate Decision
02:00 NZD RBNZ Monetary Policy Statement
03:00 NZD RBNZ Press Conference
06:00 GBP Consumer Price Index
06:00 GBP Core Consumer Price Index (YoY) (Jul)
09:00 EUR Gross Domestic Product s.a.
12:30 USD Consumer Price Index (Jul)
12:30 USD Consumer Price Index ex Food & Energy (Jul)
23:50 JPY Gross Domestic Product (QoQ) (Q2)

Currency Insight by Halo Financial Founding Director, David Johnson

13/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

UK unemployment drops and earnings slow
The GBP/USD rate has crept back above $1.28 in the interbank market after positive UK employment data. The GBP/EUR rate is also up above €1.17 after the unemployment rate dropped to 4.2%, the lowest since March. At the same time, average earnings rose 4.5%, down from 5.7% in June and the slowest pace of wage inflation since December 2021. All in all, this is good news for GB PLC and will give the BOE some comfort. At a time when they are mulling further rate cuts, this is a timely reminder that some of the negative news in the UK economy over the last few years is abating. As well as the exchange rates mentioned above, we also had upticks in the pound’s spending power elsewhere. In the interbank market, a pound will buy AUD 1.9410, NZD 2.1210, CAD 1.7590 and the GBP/JPY rate has recovered to JPY 189.15. Traders will now turn their attention to tomorrow morning’s UK inflation data, which should show the headline CPI rate staying near the BOE’s 2.0% target level.

RBNZ most likely on hold
It is highly likely the Reserve Bank of New Zealand will keep their base rate on hold at 5.5% when they meet in the early hours of tomorrow (UK time). It is interesting to note that the GBP/NZD rate is less impacted by sterling’s early morning strength than other currencies, including the Aussie dollar. The RBNZ is dealing with a stronger-than-forecast employment report, delivered last week and sluggish economic data elsewhere. Few think they will deliver a pre-emptive rate cut, hence the NZD strength because the longer there is a 5.5% based yield in NZ, the longer the Kiwi dollar will remain an attractive destination for international investors. If the RBNZ does surprise the bejeezus out of us with a cut, expect significant NZD weakness. However, an ‘on hold’ decision should see the Kiwi dollar strengthen a tad.

Today's Major Economic Releases
06:00 GBP Claimant Count Change (Jul)
06:00 GBP Employment Change (3M) (Jun)
06:00 GBP ILO Unemployment Rate (3M) (Jun)
12:30 USD Producer Price Index ex Food & Energy (YoY) (Jul)

Currency Insight by Halo Financial Founding Director, David Johnson

12/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

Although Monday will be a very quiet one as far as data is concerned, sterling traders are braced for a very busy week. Tuesday brings the UK employment data, with an expectation that the unemployment rate will tick slightly higher to 4.5% or thereabouts. Wednesday brings UK inflation data with the consumer price index forecast to have risen to 2.3% in the year to July. That is a tad higher but still well within the Bank of England's target range. Nonetheless, there is a concern that the BOE might use this as a reason to keep interest rates higher for longer. Thursday brings economic growth data for the second quarter. There is a chance that the Q2 GDP growth figure will be downgraded slightly to 0.6% and that could trim the annual growth rates to 0.2%. The week is capped off by retail sales data on Friday. We are expecting a bounce back in the July data with 0.8% growth on the month after a 1.2% contraction in June. With so many variables, sterling is likely to be very volatile this week. In the interbank market, the pound starts the week at USD 1.2760, EUR 1.1680, AUD 1.9390, NZD 2.1240 and CAD 1.7520.

Today's Major Economic Releases
No major economic release data.

Currency Insight by Halo Financial Founding Director, David Johnson

09/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

USD slips on lower jobless claims
The US dollar has given up some of its gains in the last 24 hours after the weekly jobless claims numbers came in softer than expected. Just 233,000 fresh claims were lodged for unemployment welfare last week. That's comfortably below the 241,000 the markets have been expecting and an improvement on the previous week as well but, one swallow does not a summer make, as one ancient Greek once said. Nonetheless, it has given traders a reason to take profit on some of their dollar purchases and the GBP/USD rate has risen more than half a cent to this morning's interbank level of $1.2770. The EUR/USD rate hasn't risen quite as much. That pair is sitting at $1.0925 as I write. We lack U.S. data today but traders will be prepping for next week's US inflation numbers on both consumer and producer levels as well as retail sales and the Michigan consumer sentiment index. All are watched by the Federal Reserve for signs of exuberance in the consumer market.

CAD rangy ahead of expected unemployment rise
The Canadian dollar has weakened a little alongside the US dollar And it may lose a little more ground this afternoon when Canada publishes the unemployment data for the month of July. The markets are expecting a rise in the unemployment rate to 6.5%. That would be the highest unemployment rate since January 2022, hefting further pressure on the Bank of Canada to start bringing down the cost of borrowing before the economy starts to slide. As at this morning, the GBP/CAD rate is up to an interbank level of CAD 1.7620, a little over half a cent up on yesterday’s lows.

Today's Major Economic Releases
01:30 CNY Consumer Price Index (YoY) (Jul)
06:00 EUR Harmonized Index of Consumer Prices (YoY) (Jul)
12:30 CAD Net Change in Employment (Jul)
12:30 CAD Unemployment Rate (Jul)

Currency Insight by Halo Financial Founding Director, David Johnson

08/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

AUD makes gains as RBA Governor doesn’t rule out rate hikes
The governor of the Reserve Bank of Australia, Michele Bullock, followed up on the RBA keeping their base rate on hold at 4.35% by refusing to rule out further interest rate hikes if inflation doesn't come under control. At a time when most central banks are looking to cut interest rates and only the Bank of Japan has been seen to lift its base rate by a tiny amount, this is very hawkish talk indeed. The GBP/AUD rate has fallen back from its July highs and is down to AUD 1.9362 in the interbank market this morning. Other than a poor result from the UK Royal Institute of Chartered Surveyors house price balance, There is very little other data today. Consequently, we are likely to see another day of range trading in the GBP/AUD rate.

US jobless claims nervously awaited after poor non-farm report
Friday's release of the very poor July employment report has kept the US dollar on the back foot. We will get a measure of the weekly jobless claims today. The markets are expecting over 240,000 fresh claims for unemployment welfare payments in the last week. This number has been trending higher since January; further evidence, if it were needed, that the US economy is slowing and the Federal Reserve should be doing its bit to reduce the cost of borrowing, taking its foot off the brakes. The GBP/USD rate is steady at around $1.2700 and EUR/USD is also looking calm at around $1.0940. If the jobless claims number is north of 250,000, we may well see some dollar weakness later in the US trading session.

Today's Major Economic Releases
02:00 AUD RBA Governor Bullock speech
03:00 NZD RBNZ Inflation Expectations (QoQ) (Q3)

Currency Insight by Halo Financial Founding Director, David Johnson

07/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

Sterling's slide continues
Relatively positive UK data hasn't been enough to support the pound. Yesterday's service sector purchasing managers index was stronger than expected and this morning's construction sector PMI rose to 55.3 in July from 52.2 in June. That's the most confident reading in two years. We also saw the Halifax house price index rise to an annual rate of 2.3% in July, matching January 2024 as the strongest growth rate since November 2022. This positive data should have supported the pound but rioting on the streets of Britain is still the news that's making the headlines and that is not conducive to dragging investor funds into the UK. Hence the GBP/USD rate is still down at $1.2710. This pair peaked at $1.3050 in the middle of July. The GBP/EUR rate also peaked at €1.1935 in mid-July, but is down to €1.1650 today, having tested as low as €1.1600 early on Tuesday. Today is very quiet on the data front, so politics will drive the value of the pound, gawd 'elp it.

Chinese import surge – Aussie and Kiwi follow suit
Chinese imports were up 7.2% in the year to July; more than double the market forecasts and significantly wiping out the 2.3% contraction in the year to June. Such a substantial improvement is bound to have an impact in the Asian and Australasian markets and we can see strength in the Australian and New Zealand dollars overnight. The GBP/AUD rate is down to AUD 1.9420. This pair peaked above AUD 1.99 on Monday. GBP/NZD is down to NZD 2.1135, 8 cents down from the highs we saw at the end of July. Other than a smattering of tier 2 Aussie and Kiwi data tonight, the diary is thin for the next 24 hours.

Today's Major Economic Releases
02:00 AUD RBA Governor Bullock speech
03:00 NZD RBNZ Inflation Expectations (QoQ) (Q3)

Currency Insight by Halo Financial Founding Director, David Johnson

06/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

RBA on hold and may remain so
Michele Bullock, the Governor of the Reserve Bank of Australia, announced an on-hold decision early this morning. In maintaining the Aussie base rates at 4.35%, Governor Bullock also stated that progress on inflation had been slow for the last year and that interest rates may need to stay higher for longer than anticipated in order to fight the risk of further inflation. Sterling had a rough Monday and the GBP/AUD rate had already fallen to AUD 1.9575 ahead of this announcement. As such, although there was a bit of volatility around the announcement and the statement, the overall impact on this currency pair has been negligible. We are at AUD 1.9585 this morning.

Sterling slips on public disorder concerns
Despite encouraging UK service sector purchasing managers indices, the pound had a poor day on Monday, slipping against most other currencies. We will get the July construction sector purchasing managers index today and that too is expected to be an improvement on the 52.2 we saw in June. However, the thing that is damaging the pound is the civil unrest spreading across Britain’s city centres. We saw further riots last night with clashes between pro and anti-immigration groups. The police and local businesses took the brunt of everybody's ire. The UK Prime Minister has only been in office for a month and yet his approval ratings have fallen through the floor as he clashes not only with his electorate but also with none other than X and Tesla owner, Elon Musk over his branding of Indigenous Brits as ‘far-right’. With this kind of disorder raging around the country, it is unsurprising that investors would move their funds away from UK assets. In the interbank market the pound is down to USD 1.2745, EUR 1.1660, AUD 1.9600, NZD 2.1520, CAD 1.7640 and CHF 1.0910.

Today's Major Economic Releases
04:30 AUD RBA Interest Rate Decision
04:30 AUD RBA Monetary Policy Statement
04:30 AUD RBA Rate Statement
05:30 AUD RBA Press Conference
09:00 EUR Retail Sales (YoY) (Jun)
22:45 NZD Employment Change (Q2)
22:45 NZD Unemployment Rate (Q2)

Currency Insight by Halo Financial Founding Director, David Johnson

05/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

JPY in stellar advance
The star performer in the foreign exchange markets over the last few weeks has been the Japanese yen. The GBP/JPY rate hit JPY 208 in the second week of July after an advance that started from JPY 179 in January. In less than a month, with some help from Japanese authorities intervening in the market and a shock interest rate rise from the Bank of Japan, this currency pair is all the way back down to JPY 180 this morning. These volatile moves are undeniably driven by the Japanese yen. Ergo, the USD/JPY rate went from JPY 140 in December to JPY 162 in July and is back down to JPY 143 this morning. The big question is whether, once the excitement of a very unexpected interest rate rise pulls out of the discussion, will the yen resume its position as a source for carry trades because the base rate is still only 0.25% and, even though other central banks are starting to cut their interest rates all talking about doing so, their base rates are generally considerably higher than that of Japan. Japanese yen sellers need to consider whether this is a short-term phenomenon or not.

US employment disappoints
Friday US employment data was more disappointing than markets had expected, fueling calls for earlier interest rate cuts from the Federal Reserve. The US dollar had strengthened ahead of the data but all of that strength ebbed away in very short order once the numbers had been announced. Fresh nonfarm jobs amounted to just 114,000. The markets had been forecasting around 180,000 fresh jobs being created. The annual rise in average hourly earnings also slowed to 3.6%, down from 3.8% in the previous month. I have seen a number of reports this morning suggesting the Federal Reserve will cut within a month and may even cut three times during this calendar year. It is all speculation of course but it does play into the market sentiment hence the dollar looking a little trepidatious at its current levels. GBP/USD is back up to $1.2785 this morning and EUR/USD has made a notable advance to $1.0945.

Euro gains across the board
There has been no obvious trigger to give the euro support after very narrow range trading. I have seen a number of reports suggesting that this is a ‘risk off’ period. However, that would normally be characterised by a weak US dollar and, although the dollar gave up the gains made early on Friday, it isn't looking particularly weak overall. There will be an element of yield-driven trading. The European Central Bank has being slow to embrace the softer eurozone economic data, where other central banks seem set on cutting interest rates and the Bank of England did so just last week. The week ahead is light on eurozone data, so we may see some unwinding of this euro strength as the week progresses. We start with the euro at €1.1675 against the pound and $1.0945 against the USD.

AUD weaker ahead of likely RBA ‘on hold’ decision
The Reserve Bank of Australia will make its interest rate announcement in the early hours of tomorrow. The most likely outcome is that they will leave their base rate on hold at 4.35%. As with every central bank, the statement they release after that decision will be the key piece of data. Traders and investors will be looking for hints as to when the Reserve Bank of Australia will start cutting interest rates because it does seem the likelihood of a rate hike has been ruled out for now. Thus, the GBP/AUD rate is relatively elevated at AUD 1.9885, the highest level we have seen since August 2023. If this pair breaks above AUD 1.99, it will be the highest since 2020.

Today's Major Economic Releases
01:45 CNY Caixin Services PMI (Jul)
14:00 USD ISM Services PMI (Jul)

Currency Insight by Halo Financial Founding Director, David Johnson

02/08/2024

Welcome to today's currency insight. If you need help and advice with a future trade, contact us today and experience our award-winning service for yourself!

BOE cuts but signals caution
The Bank of England's 9-member Monetary Policy Committee voted to cut the UK base rate for the first time in four years, from 5.25% to 5.0% in a split 5:4 decision. In the statement released with the decision, next stated that they need to, “make sure inflation stays low and be careful not to cut interest rates too quickly or by too much. Initially, that very cautious tone allowed the pound to retain some of its recent strength. However, we have seen some sterling selling overnight that has brought the GBP/USD rate down to $1.2730 and GBP/EUR down to €1.180. These aren't enormous moves but that same GBP weakness is replicated in other currency pairs. i.e. GBP/AUD is down to AUD 1.9520, GBP/NZD is at NZD 2.1370 and GBP/CAD is at CAD 1.7645. We lack UK data today but we do have a speech from Huw Pill, who has the title of Chief Economist and Executive Director for Monetary Analysis and Research at the Bank of England. His business cards must be A4 size. It will be interesting to see whether he can shine any light on the date of the next rate cut.

US July employment report today
When the US employment report is rolled out this afternoon, the markets are expecting a subdued number of new jobs being created in the non-agricultural sectors. The consensus estimate is that we will see 175,000 jobs being created. That is a historically low-end result and we need to watch the June revisions because they tend to be revised downward after the data has been more thoroughly examined. If the labour market is still slowing, it calls into question the Federal Reserve’s decision to hold that base rate at 5.5% when they met on Wednesday. For now, that ‘on hold’ decision is benefitting the USD, especially after the BOE rate cut. The GBP/USD rate is down to $1.2730 and the EUR/USD rate is also lower at $1.0790 but that pair appears to have levelled off…for now.

Today's Major Economic Releases
06:30 CHF Consumer Price Index (YoY) (Jul)
12:30 USD Average Hourly Earnings (Jul)
12:30 USD Nonfarm Payrolls (Jul)

Currency Insight by Halo Financial Founding Director, David Johnson

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