FX Market Overview

Welcome back everyone. I hope those of you in the UK had a super long weekend and those of you in the rest of the world didn’t miss us too much. I had a really busy weekend but I did make time to watch the Grand prix. I wonder how many Brits switched off physically or mentally when Lewis Hamilton crashed out of the race. In that instant, I realised he is the only reason I watch F1 these days but good to see Jensen having a solid trouble free drive.
Thankfully there was no market crash over the weekend (neat link huh!) but the markets were still active in London’s absence. Most traders were still mulling Friday’s announcement by the Federal Reserve Chairman that there would be no immediate shunting of more money into the financial systems but that there would be further talks in September on the matter.
That announcement restored some stability and a little confidence to the markets so the US Dollar lost ground as funds seeped out into the likes of the Australian and New Zealand Dollars and into shares and other assets. The US Dollar, Swiss Franc and Japanese Yen all lost a little ground; none pays any interest so when confidence peeks above the parapet, investors run from cover and invest in assets which give a return or yield of some sort. Hence strength this morning in the high yielding currencies like the Australian and New Zealand Dollars. That strength was enhanced by an uptick in Aussie inflation from 3.3% to 3.6% and the likelihood of higher interest rates in New Zealand in the medium term even though we don’t expect any change at their next meeting
This is a short week for the UK markets but it is a significant one with it being a month end and it culminating in the US employment report for August. In between now and then, we get Eurozone inflation and unemployment data, a swathe of UK manufacturing data and a smattering of British housing market figures and we will see business and consumer confidence indices from all continents.
It’ll be a short sharp one then but there is plenty to keep things lively so don’t blink. Sorry this is a short report today but lots to do and so little time. I will be more detailed tomorrow.
I will leave you with this though, we have seen a number of local money arrangements in places like Lewes and others but an Italian town called Filettino is trying to go one better by establishing itself as a principality in order to be able to print its own money and gain independence from the government. This appears to be a protest at government spending cuts and efforts to make Filettino merge with a nearby town. Good luck to them. I hope they succeed. A bit of independence never did anyone any harm.