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
UK House Prices Unsurprisingly given the 12 interest rate rises and cost of living squeeze in the UK, the housing market has seen its largest year on year fall since 2009 when everyone was suffering from the global financial crisis. In the year to April the UK housing market has dropped by 3.4% with the […]
Opportunity for a weaker Dollar The passing of month-end allows markets an opportunity to reassess currency valuations. Despite a cooling off within the Dollar as forecasted following the agreement between the White House and Kevin McCarthy, month end flows yesterday showed favourable conditions for a short-term Dollar resurgence. The beginning of June coincided with headlines […]
Turkish Lira While President Erdogan removed the uncertainty overhanging the Turkish market by winning the election in the run off over the weekend, the news served to cement the certainty that nothing much was likely to change with respect to Turkish economic policy or indeed the subservient role of the Central Bank of Turkey to […]