Daily Brief – US Dollar

US Dollar

For differing reasons USD is having a strong week both against the Japanese Yen and the EUR. Both currencies are weakened by political headwinds but that is where the similarities end. France is rather more influencing the EUR due to worries over its debt and its resistance to getting it under control. Japan is suffering from inflation with interest rates still low, probably too low, and the incoming PM Sanae Takaichi is critical of the Bank of Japan raising interest rates. The risk in Euroland is rather more of inflation going too low with the economy pancaking which has raised the likelihood of the ECB engineering a further small cut in EU interest rates. Sterling is also feeling the strength of USD and is trading almost half a cent lower. All this is even more in focus due to the lack of US economic stats for the market to focus on due to the US Government shutdown which at this point shows no sign of an early resolution. Consequently, USD is benefitting against the three other major currency trading currencies even more than would normally be expected in these circumstances.

EUR/USD 1.1670.

Oil

With Brent at $65.79 after OPEC+ said it would boost crude oil production by 137,000 barrels a day this smaller than feared output increase served to underpin the oil price together with the news that a major Russian oil refinery had sustained damage over the weekend. The underlying theme is one of concern that a lack of demand owing to subdued economic conditions will keep a lid on the oil price in the foreseeable future.

GBP/USD 1.3441.

Head and Shoulders

No not a shampoo advert but a pattern that quickens the pulses of all chartists: a head and shoulders pattern is emerging (isn’t it always?!) in EUR/USD which suggests that EUR bears are beginning to target a range of EUR/USD 1.16 -1.14. If it reaches 1.16 the neckline will be confirmed, which will prompt the target becoming 1.14. If however, the rate bounces back to 1.1780 then all bets are off and the downward trend will be invalidated. It were ever thus.

GBP/EUR 1.1511.

Car Meets

This is not exactly new in London but it is now a thing: think Elmers End at 2 am if you must with illegal speeding, smoking tyres and lots of hoodie wearers filming on their phones. Large car parks at supermarkets, retail parks or industrial estates are the venues of choice. Apart from being dangerous and noisy while also often illegal, there seems little that the Police can do. I knew you were wondering: Elmers End lies equidistant between Croydon and Bromley in South London. Now doesn’t that sound more exotic?!

EUR/JPY 175.97.

Oh Pretty Woman

This day in 1964 Roy Orbison stood at Number 1 in the UK charts with this number which has long outlasted the singer who departed this world in December 1988. Named after Roy Orbison’s wife Odette who elected to go shopping during the creative process, prompting the singer to ask if she was OK for cash. Cowriter Bill Dees interjected that “a pretty woman never needs money”.

Pretty woman, walkin’ down the street
Pretty woman the kind I like to meet
Pretty woman I don’t believe you, you’re not the truth
No one could look as good as you, mercy

Pretty woman won’t you pardon me
Pretty woman I couldn’t help but see
Pretty woman that you look lovely as can be
Are you lonely just like me

Pretty woman stop awhile
Pretty woman talk awhile
Pretty woman give your smile to me
Pretty woman yeah, yeah, yeah
Pretty woman look my way
Pretty woman say you’ll stay with me
‘Cause I need you, I’ll treat you right
Come with me baby, be mine tonight

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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