US Dollar soars following Federal Reserve statement

What you may have missed this week

• Currency volatility ahead…

• Euro holding its own, despite everything…

• US Dollar soars following Federal Reserve statement

• Canadian Dollar falls after show of strength

Currency Market Overview

It would be impossible to write the last weekly roundup of the year without mentioning the “B” word… Yes, Brexit is the main matter on everyone’s minds and in every conversation right now and is the main mover of the Pound as we head into the holiday season. All the activity currently seems to focus on no-deal preparations, on both the UK and EU sides of the equation but we are none the wiser as to progress. It has been confirmed that the deal debate will continue in the UK Parliament in January, so we wait with breath that is well and truly bated…

Currency volatility ahead…

It doesn’t stop there, of course, currency markets are traditionally volatile at the end of the year and start of January, as international public holidays cut down trading time, reduce the numbers of traders at their desks and therefore enhance the impact of any events – causing  exchange rate volatility where it would not normally exist. . And with Brexit a mere matter of months away – sans agreement - political and economic chaos is affecting not just the Pound, but the Euro, too.

When you throw the antics in the US; and growing global trade tensions into the mix, it should all serve to stir the currency pot in the remaining days of the year and early days and weeks of 2019. It’s a good time to get in touch and discuss how it could affect your international payments, whether personal or business.

Euro holding its own, despite everything…

The Euro seems to be doing surprisingly well, despite continued disappointing economic data, particularly from its major contributor, Germany. But Brexit fears are starting to bite. Just yesterday, the EU released news of their no-deal Brexit plans, and a report from the Chamber of Industry and Commerce for Munich and Upper Bavaria was released saying that Hard Brexit would cost the economy of Bavaria over a billion Euros annually, given the reliance of the Bavarian economy on manufacturing and international trade. The Chamber’s President, Eberhard Sasse, said that, “An EU without the British is a great loss for the internal market and a serious setback to the idea of European integration."

It's also interesting that the British government is being criticised for the breadth of  differing views within the ruling parties, when similar disagreements are very evident between the EU negotiators and the governments of the member states on this issue of the Brexit deal.

US Dollar soars following Federal Reserve statement

The US central bank, the Federal Reserve, did raise interest rates on 19th December, despite protests from the US President. In a confident statement, they said there would be two more interest rate increased in 2019. This strengthened the US Dollar against all its major currency partners. Surprisingly, inflation is still lower than anticipated, but only slightly. The Federal Reserve seemed unconcerned about economic growth and stated that politics had nothing to do with the decision: a barely veiled dig at President Trump.

Canadian Dollar falls after show of strength

The Canadian Dollar, after soaring at the end of last week, fell against its major currency partner, the US Dollar, on lower crude oil prices and disappointing Canadian inflation figures. Coupled with the Federal Reserve’s boost to the US Dollar, this helped the US currency hit 18-month highs against its North American neighbour.

Employment data fails to lift Australian Dollar significantly

After falling dramatically against its key currency pairings earlier in the week, the Australian Dollar got a small boost from the latest employment data, which showed that 37,000 new jobs were added to the Australian economy in November 2018. However, the unemployment rate increased unexpectedly, essentially balancing out the Australian Dollar’s performance against its peers. The Australian Dollar is now one of the worst performing currencies within the G10 and uncertainty on the direction of the Reserve Bank of Australia (RBA) is adding to market nervousness with regards to the Aussie Dollar.

New Zealand Dollar falls on commodities connection

Across the Tasman Sea, the New Zealand Dollar is currently the weakest Asia Pacific currency, as another wave of risk aversion hits the Asian markets. A reliance on commodity exports leaves both the New Zealand and Australian Dollars vulnerable alongside their fellow commodity linked currencies, the Canadian Dollar, and South African Rand. The New Zealand Dollar suffered even more, as the latest NZ Gross Domestic Product (GDP) figures were deeply disappointing. Q3 forecasts from central bank, the Reserve Bank of New Zealand (RBNZ) were way off, predicting 0.6% growth as opposed to the 0.3% the economy actually achieved. Slowing global economic growth seems to have been a major contributing factor.

Be prepared for next week…

Next week is festive break time for much of the world, with public holidays on 25th and 26th December. Beware – the holiday season, last few days of the year and first days of a New Year are often a hotbed for currency volatility, as the extended holiday period means fewer trading hours – and therefore less time to balance out exchange rate swings. With myriad global political tensions and economic concerns in the current climate, we can expect a few fireworks! As we often mention, these are super opportunities to place automated Limit orders in the market to try to benefit from the volatility. Automated Stop loss orders can also be used to monitor your currency risks whilst you are eating, drinking or recovering. Speak to your Halo Financial contact to discover how you could use automated orders.

Read our tips for staying safe when making currency transfers in times of unpredictability and some healthy New Year’s Resolutions when it comes to currency exchange.

Festive Opening Hours

Finally, here’s our opening hours for the festive period. Do get in touch to see how we can help.

December
Monday 24th – 08:30 – 17:30
Tuesday 25th  – Closed
Wednesday 26th – Closed
Thursday 27th – 08:30 – 17:30
Friday 28th – 08:30 – 17:30
Monday 31st – 08:30 – 17:30

January
Tuesday 1st – Closed
Wednesday 2nd – Normal hours resume – 08:30 – 20:30 

Halo Online will be available over the holidays, apart from the following times (GMT): 

• All day Christmas Day and until 19:00 on Boxing Day

• From 22:00 on New Year’s Eve until 19:00 on New Year’s Day

Wishing you a wonderful break and a happy, healthy and prosperous New Year!

This is the last weekly report until the New Year, so we would like to take this opportunity to thank you all for your support and custom throughout 2018 and wish you all a very Merry Christmas and a Happy, Healthy and Prosperous 2019.