Last week saw some of the first major signs of just how severely the current pandemic is impacting global markets.
Most noticeably Nonfarm Payrolls in the US which declined by 701k. For anyone not usually tracking this figure… that’s a lot.
Additionally, the US Unemployment Rate rose to 4.4% from 3.5% in February.
Trump has already u-turned on previous optimistic forecasts and said that this could reach as high as 15%
Unsurprisingly UK consumer confidence recorded its biggest fall since 1974.
A relatively bearish outlook for Sterling in the short term which is to be expected especially versus the Dollar with so much risk-off sentiment.
European figures were moderately respectable however, don’t be surprised to see low numbers pull through over the coming months.
Specific attention should be paid to Unemployment and GDP in Q2 especially when trading EUR>USD.
The end of this week should be interesting with much of the notable releases coming out Thursday and Friday.
UK Trade Balance and Manufacturing for Feb on Thursday, along with an ECB Monetary Policy Meeting.
Thursday afternoon for Initial Jobless Claims from the States (expect this to be high) and Consumer Price Index from the US on Good Friday are all ones to watch.
A
sea of red in the midst of the worst market losses since the financial crisis
of 2008.
Sterling is in freefall against the EUR and has taken an 8% hit versus the
Dollar in the last month alone.
The Bank of England’s surprise rate cut last week did little to stop the
bleeding.
Boris Johnson is in discussions with the new BOE Governor today regarding
coordinated action.
However,
with confirmed cases of COVID-19 in the UK skyrocketing, it’s difficult to see
what measures will slow down this juggernaut of a drop.
Earlier today the FTSE, CAX, and DAX all opened at least 6% down and with many
global markets still in turmoil, the money is quickly rushing into the Dollar.
Although
fundamentals still remain technically solid, at this stage that really goes out
the window and the risk-off sentiment remains incredibly strong.
Our Traders will have no doubt been speaking with you these last
few weeks, however, if you do not have a clear risk strategy in place
please contact us as soon as possible on +44 (0) 203 889 8839.
Markets plummet as Coronavirus spreads.
Global markets were hit with their worst trading week since the financial crisis in 2008.
So far, there have been a total of 83,000 cases reported from 58 countries - though the true figure is almost certainly a lot higher.
Sterling took heavy losses against a basket of currencies but most noticeably was down over 3% versus the Euro.
With investors fleeing perceived riskier assets this could be a nasty end to Q1 for the Pound. Although downside risk still remains for EUR/USD, the Euro traded up on the Dollar to a 3 week high.
With the World Health Organisation lifting its global risk assessment to very high, the primary focus will be on virus developments rather than specific economic data releases.
Notable releases for the week: US Manufacturing PMI on Monday. EUR Consumer Price Index on Tuesday. ISM Non-Manufacturing from the States on Wednesday. A Bank Of England speech Thursday afternoon and Nonfarm Payrolls from the US on Friday.
Markets fall amid
fears the Coronavirus outbreak is quickly turning into a global pandemic.
Sterling took a hit on the week as the FTSE 100 is currently posting a
triple-digit loss for the last 5 trading days.
Even with positive UK inflation figures on Tuesday and stronger than expected
Retail Sales data on Wednesday, GBP could not sustain its gains of the
previous week.
The
Dollar had the best of it, likely a consequence of risk aversion as oppose to
exceptional figures being posted.
We saw the Euro putting a temporary stop to its recent downside move after
stronger than forecast German Producer Price Index on Thursday.
As one might expect Gold is soaring and currently sits at a 7 year high with
investors fleeing riskier assets.
In
other news, Boris Johnson described an EU law relating to motor insurance for
golf carts and ride-on lawnmowers as ‘insane’.
Maybe the grass won’t be greener for the Prime Minister after all.
Notable releases for the week are GDP figures from Germany on Tuesday. Business Climate from the Eurozone on Wednesday and Annualised GDP figures from the States on Thursday.
| Super Sterling surges up. Last week showed the Great British Pound making a long-overdue comeback on the back of strong data and political changes. Tuesday produced forecasting beating UK GDP Figures which made for Sterling making early week gains against the Euro and Dollar. The noticeable spike came on Thursday after Rishi Sunak was appointed Britain’s new Chancellor of the Exchequer. With previous experience at Goldman Sachs and his own investment fund, the city took notice and GBP spiked over 1% to its highest level in nearly 2 months. |
The Euro remains under pressure against the Dollar and closed the week at its lowest level since April 2017. After positive US Retail Sales data on Friday, it is tough to make a case for a Euro resurgence in the near term.
In other news reported Coronavirus cases skyrocket and storm Dennis causes havoc with further wind and rain.
Stay safe out there people 🙂
Notable releases for the week are Economic Sentiment from Germany and the Eurozone on Tuesday. Consumer and Producer Price Index on Wednesday and a packed Friday with UK Markit Services, German PMI Composite and Markit Manufacturing from the States.
Weekly update for 10/01/2020
A strong week for the Dollar sees the greenback gaining ground.
The US Dollar started the week positively with forecast-beating Manufacturing data on Monday whilst Tuesday showed Factory Orders up for the month of December.
By Friday afternoon excellent Non-Farm Payrolls had harvested (pun intended) over a 1% upside move versus Sterling and gained momentum against the EUR.
Christine Lagarde is making her mark as ECB President with subtle but significant changes at Europe’s most powerful institution.
Proposals are now handed out a week in advance and a request to put phones away was also issued, no more candy crush at the meetings guys.
Halifax House Prices for January showed another move upwards reflecting the so-called ‘Boris bounce’ after the Brexit decision.
In other news a film titled Parasite swept the Oscars, semi worrying considering the current situation.
Plus our tanned fellow across the pond Mr. Trump gave Boris a telling off over the UK’s decision to allow Huawei into its 5G network.
Maybe they’ll make up in time for Valentine’s day.
Notable releases for the week are GDP Figures from the UK on Tuesday. Consumer Price Index from the US on Thursday and GDP figures from the Eurozone on Friday.
Weekly Market Update for 03/02/2020
This week the eyes of the world were on the World Health Organisation and China following the increasing spread of Coronavirus.
Markets turned increasingly risk averse following the World Health Organisation deeming the Coronavirus a global health emergency. The first repatriation flight to the UK arriving at RAF Brize Norton on Thursday and the passengers then taken to Merseyside to be quarantined for 10 days. Stocks generally took a sizeable hit during the week as the virus spread globally, confirmed deaths passed 200.
Markets also dropped sharply in China, investors returned from their new year holiday to a vast swathe of the world's second largest economy virtually shut down by the coronavirus epidemic.
In currency trading the news was marginally better; the US Dollar was up early in the week as traders retreated to traditional safe haven currencies. The Federal Reserve kept interest rates unchanged on Wednesday, although the bank's Chairman Jerome Powell noted a low inflation outlook.
Sterling finished the month on a high after the Bank of England kept interest rates steady, stating signs that Britain’s economy had picked up since the December election - and of a stabler global economy - meant more stimulus was not needed at this time. The Monetary Policy Committee split once again 7-2 in favour of keeping Bank Rate at 0.75%
The Euro continued its sluggish performance after poor GDP figures on Friday, making it tough to see it breaking upwards at any point in the near term. GDP only expanded by 0.1% in the final quarter of the year, down from 0.3% in the third quarter. This is the weakest performance since 2013 - this poor performance raises the prospect that some of the eurozone countries will fall into recession during this year.
| Following on from the UK exit from the EU on Friday the markets will now focus on trade news. Today the EU’s chief negotiator, Michel Barnier, will present a draft mandate for the negotiations with the UK this will set out the EU’s position for the talks. We also expect a statement from Boris Johnson countering with the UK's proposals. |
Notable releases for the week are; on Monday, Markit Manufacturing figures from across the EU, followed on Wednesday by Markit Services for the same region.
Non-Farm Payroll figures will also be published on Friday.
Weekly Market Update for W/C 27/01/2020
Last week world leaders, captains of industry and the global financial big hitters all gathered in the Swiss resort of Davos for the world economic forum's annual meeting.
The hot topic of the week was climate change - which we found particularly humorous as half the attendees flew in on a private jet!
Sterling was the star of the week with a number of forecast beating releases; from house prices to manufacturing data. Unemployment was also positive with average earnings including bonuses jumping 3.2% for November.
The Pound closed the week up across almost every major currency which no doubt will delight GBP sellers looking to forward purchase to take some risk off the table heading into February.
The Euro continued its slide against the Dollar hitting a 7 week low and is currently trading off more than 1% from the start of the year.
| In other news a number of warnings were issued at Davos in respect to global debt levels. Kristalina Georgieva, head of the International Monetary Fund, said ‘’there are disturbing signs of an asset bubble and acknowledged that the side-effects of ultra-low interest rates and quantitative easing are becoming more treacherous’’. We have been keeping in tune with this exact subject for some time, and will of course, notify all of our partners on any and all developments we see. |
| Notable releases for the week are the US & UK Interest rate decisions on Wednesday and Thursday and Q4 GDP figures from the Eurozone of Friday. |
Weekly Market Update for W/C 20/01/2020
Last week was comparatively subdued compared to recent events, with notable movements few and far between. The highlights for last week were sterling remaining resilient versus both the Euro and the Dollar, this was despite awful UK Retail Sales numbers published on Friday.
UK inflation fell to a three year low prompting the odds of a BOE rate cut to jump above 60%. Figures from the Office for National Statistics (ONS) show the Consumer Price Index was 1.3 per cent last month, down from 1.5 per cent in November.
The Dollar gained ground against the Euro on the week, possibly due to "one of the greatest trade deals ever made’’ – Donald Trump. Although it's much more likely to just be retracing towards the lower end of the trading range.
Some details of the trade deals are as yet unresolved. The Phase 1 trade deal with China was meant to reduce tensions after 18 months of a tit-for-tat tariff war between the world’s two largest economies that has hit global growth. The Phase 1 agreement will leave in place 25% tariffs on $250 billion of Chinese industrial goods and components used by U.S. manufacturers, and China’s retaliatory tariffs on over $100 billion in U.S. goods.
Commentators note "The deal offers some psychological benefits but their impact is unlikely to last beyond the US presidential election in November. What we see now will only be a brief pause in the lasting rivalry between the two countries." - South China Morning Post.
In other news it apparently costs £500,000 to ring a bell in Westminster! Proposals for a "Brexit Celebration" have been hampered by the ongoing renovations in The Palace of Westminster. A Crowdfunding campaign has been launched to help get Big Ben to chime, we will wait and see the outcome!
On a more serious note the UK government received a warning from the French President Emmanuel Macron, he stated the block would ignore the Dec 2020 deadline if a deal isn’t agreed in time (very unlike the French to be difficult).
Notable releases for the week ahead are UK unemployment figures on Tuesday, ECB Interest Rate Decision on Thursday and Markit Manufacturing number on Friday from the UK, EU & US.
Weekly Market Update for W/C 13/01/2020
An eventful start to 2020!
The first full trading week of the year kicked off with a host of global related incidents affecting market volatility in all areas.
Sterling had a positive start to the year after strong Markit Services PMI and traded up 1% versus both the Euro and The US Dollar.
However, early week gains were short lived after Mark Carney, the exiting (thankfully) Governor of the Bank of England, indicated the central bank may well keep rates on hold, until there is definitive evidence inflation is above target.
Some pretty poor Nonfarm and Average Earnings data from the US was posted on Friday, the Non-Farm Payrolls report for December 2019 has dropped below expectations with an increase of 145,000 against 164,000 expected.
It was a fairly reasonable week data-wise from across the EU, stronger than expected Retail Sales for the month of November and the Unemployment Rate remaining steady at 7.5%.
In other news European stock markets are booming.
Gold hit a 7 year high of $1,568 an ounce with the rising tensions in the middle east being the major factor in the gold price spike.
The UK is scheduled to exit from the EU (again) at the end of the month, however, the House of Lords savaged the current Brexit deal siting ‘serious concerns’ that the European Union has been given the upper hand.
Notable releases for the week are UK CPI on Wednesday, the ECB MPC report on Thursday and Consumer Sentiment along with a FED speech from the US on Friday.
[et_pb_section admin_label="section"] [et_pb_row admin_label="row"] [et_pb_column type="4_4"][et_pb_text admin_label="Text"]Market Update for W/C 20/12/2019
With 2019 drawing to a close the last full trading week of the year was full of volatility and key events.
Sterling took heavy losses against a basket of currencies and closed the week at similar levels to where it traded pre-election.
Even with better than expected UK GDP and Unemployment data, the Pound could not hold on the its previous week’s gains.
MP’s vote 358 to 234 to pass Boris Johnson’s withdrawal agreement putting the UK on course to leave the EU on 31st January, this also confirms the December 2020 deadline for negotiations on a trade deal with the European Union, creating a new Brexit cliff-edge and cutting short sterling’s post-election rally
The Bank of England voted 7 to 2 to keep interest rates on hold at 0.75% at this week’s BoE meeting. Policymakers Michael Saunders and Jonathan Haskel once again voted to cut rates, saying the central bank needed to move quickly to respond to signs that Britain’s robust job market was faltering.
The other 7 members however felt it too soon to take action. Economic growth is expected to pick up in early in the new year thanks to the easing of Brexit uncertainty, higher government spending pledges and a recovery in global economic growth.In other news from the BoE the market had confirmation that Andrew Bailey is to replace Mark Carney as the Banks new Governor.
In other news President Trump was officially impeached however, continues to remain in office.
Despite the political turmoil Wall Street remains resilient with the main US indexes hitting fresh all-time highs.
This week we hope everyone will be enjoying their turkey and not scratching their heads about the markets.
From all the team at Millbank we wish you all a very Merry Christmas and wish you and your families a wonderful festive week.
Millbank FX Market Update for week 16/12/19
Welcome to our first weekly market update and frankly we couldn't have started following a more dramatic week!
Last week we saw a mixed bag in terms of UK data publication, leading the way was poor industrial production and non EU trade balance, however better than expected manufacturing production for October ensured some positive news too.
Of course the main focus of the week for UK markets was the general election which certainly did not disappoint, with high drama right up until poles closed at 10pm. Exit poles indicated a win for the Conservatives however, the magnitude of the victory was to only become clear with large swathes of previously Labour safe seats falling to the Conservatives - voting in the largest Conservative majority in over 30 years.
The markets responded aggressively at opening on Friday with the pound surging more than 2% against the Dollar, and hitting a 3 year high against the Euro. There was a slight retraction through Fridays trading activity which was only to be expected on such a fast move. Our attention now set on the latest Brexit deadline of January 31st 2020 to see how the markets will respond to the now definite leave date.
The FTSE 100 has risen more than 2% on the back of the UK election results and the FTSE 20 rocketed to a record high.
In other news China are to hold a press conference relevant progress over trade talks with the US, US markets have fluctuated largely based on leaked news and tweets from the US government.
Notable releases for the week ahead are UK unemployment figures on Tuesday, the BOE interest rate decision on Thursday and UK GDP figures on Friday morning.
