Euro weaker in spite of German agreement on Greece

Today's Highlights

Euro weaker in spite of German agreement on Greece

Sterling pressing higher but GDP data is key

US GDP should show reduction in 2nd estimate

NZ confidence up; NZD stronger

FX Market Overview

Professor Kristin Forbes, who is a member of the Bank of England's Monetary Policy Committee said yesterday that she expects inflation to rise within the year and that would put pressure on the BOE to normalise interest rates as well. The Bank's Deputy Governor appears to agree but they will; have to make a solid case for rate rises unless inflation picks up. One unknown member of the committee is very much more cautious and is calling for rate cuts. Sterling strengthened on most exchange rates but this morning's economic growth data has the potential to either knock or support the Pound. The provisional figure was an annualised 2.7% growth. The forecasts are for no change from that so any movement up or down will change the Pound's position.

The euro is still on the back foot, losing ground against both the Pound and US Dollar yesterday. This was in spite of approval by Germany for the extension to Greece's debt repayment timetable and in spite of significantly improved German inflation, as published this morning. We get Greek and Italian data this morning but the euro is unlikely to make any substantial gains off the back of that.

This afternoon brings US economic growth figures. There is a strong chance the provisional 2.6% annualised figure will be undershot by the 2nd revision. Analysts are split on it but something around the 2.0% level is likely. We ought to expect some US Dollar weakness if that level is undershot.

The New Zealand Dollar is impressively out-performing its Aussie neighbour. Business confidence in NZ was markedly higher in February (34.4 against January's 30.4 index reading). The Sterling - NZ Dollar rate is pressing back down to the NZ$2 level and may well fall below that. Beware if you need to buy Kiwi Dollars.

And away from the markets, the 'attractive woman approaches a man in a bar' scam has taken a very disturbing turn. Dmitry Nikolaev, a news presenter from Moscow, had such an approach. He is a married man but was seduced by the attractive woman and ended up in a sauna with her. But rather than finding he had been robbed, he woke up without his testes. It appears the black market for organ transfers has escalated to theft. The operation to remove his body parts was apparently carried out by someone who knew what they were doing; unlike Dmitry. So, I guess remaining faithful to your wife and wedding vows might be a much better option next time then Dmitry.

And finally, it is the last day of the month, so there is plenty of scope for volatility today. Speak with your Halo Financial Consultant or dealer if you want to know how best to use that volatility to your advantage.

And Happy St David's Day to all our Welsh readers for Sunday. Or should I say Dydd Gwyl Dewi Hapus.