Morning Brief – Monday 31st

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

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