Banks: Do what we say (and not what we do) Dollarwise
All those exposed to currency markets whether corporate or private clients need to have a view on where the USD will go in 2019. The consensus from bank forecasters is that the USD will weaken in 2019 and especially in H2 2019 because weaker US economic growth will force the Federal reserve to cease their announced rate rise programme. However what readers should know is that at the same time the CFTC-Commodities Trading Futures Corporation- which sees the lion’s share of all outstanding Exchange Traded contracts has announced that the present level of contracts taken out by banks in the expectation that the USD will rise has never been higher! So, readers should be mindful that this is another case of the banks telling their clients do what we say and not what we do!
The fact remains that the USD is still the world’s prime reserve currency and all countries keep a high proportion of their reserves in US Government bonds and hence remain holders of USD. Therefore, do not expect to see any sizeable weakening in the USD especially in H1 2019 as the strains on the Euro will not be going away any time soon with French and Italian political challenges and the forthcoming European elections taking place between 23 and 26 May.
So, all eyes down for an eventful 2019 which will, we confidently predict, still be hugely influenced by President Trump and his itchy Tweeting fingers, European politics and nearer to home…yes almost managed not to mention it, Brexit!
A Happy and Prosperous New Year to all of our clients!
Intraday Major’s Performance:
Discussion and Analysis by Humphrey Percy, Chairman and Founder
Will they, won’t they It’s one week to the day until the next Bank of England decision. It will prove critical to the value of GBP and perhaps prove to be a defining feature of the currency market for at least the first quarter of this calendar year. Bank rate in the UK currently sits […]
Inflation With markets as ever getting ahead of themselves by many having decided that the inflation peak is a yesterday thing, there is a dawning realisation that with the current levels of USA 6.5%, 9.2% UK and 10.4% EU as at Dec 2022, inflation is not only well above target of 2% but is still […]
UK Government Borrowing By Numbers Many people have a disconnect when it comes to linking government finances with their own-bring on the idea of teaching finance as part of the school curriculum-however, yesterday’s release showing the government borrowing figures fall into the category of both attention grabbing but so eye watering that many will likely […]