EUR/USD is now through 1.24 the figure. Are we on course for 1.20 in Q1? Is a winter cold? Then yup, we’re on course for 1.20. As stated for a while now I think 1.15 is the level we’ll be trading at end of Q1 2015. Of course, the US Dollar will suffer some peaks and troughs along the way, will be at the mercy of data releases and profit taking although I don’t see a change in the general trend of dollar strength. We all know our American friends hate shopping and the general idea of consumerism so I’m sure Black Friday on 28th November will be a quiet affair. All joking aside, I think a feel good factor is starting to return to the US. With the US setting the bar on economic recovery for the UK and Europe to follow I think consumers will ramp up the retail sales this year. The more consumers spend in the shops the more money in the system and therefore the continuing improvement of the economy and in turn a further strengthening of the dollar. Couple this with the continuing travails of the single currency and you’ve got the perfect storm to push EUR/USD significantly lower. This week we have a raft of data that I think will be worse than the consensus figure(s) expected from analysts. We have inflation and employment data out of Germany and the Eurozone as a whole. We may have one or two releases that show improvement although I think the overall picture will show that of a weak growth and inflation outlook.

Need to convert USD back to EUR? Well, you’re looking not too bad at all. I would look at simply executing on Spot as the rate is at a 2014 high for you. On the flip side, if you are looking to convert EUR into USD look at 1.2450 to the upside to execute at on a market order basis. As mentioned above we may have some bouts of dollar weakness so please have something in place to take advantage of it. Please contact myself or one of the trading team to discuss.

If you have a remaining GBP/USD exposure for 2014 please do consider exchanging GBP into USD. I expect a further drop before the end of the year. We have been on a downtrend on cable for the past 3 months and I don’t see anything stemming the tide. We have data out this week that will move GBP/USD. We have the UK inflation report out tomorrow whilst going across the pond we have GDP data alongside consumer confidence data. Wednesday, the markets will be focused on the US release of Durable goods orders. If any of the US numbers comes in much better than expected then GBP/USD could drop anywhere from 50-100pips. How will GBP/USD at 1.53 affect you? Indeed, if GBP/USD is at 1.49 beginning of January what does that do to profits? Please give me a call to discuss and we can implement a strategy that will mitigate your currency risk.

GBP/EUR? It’s a little boring in all honesty. I don’t see GBP/EUR pushing massively in either direction for now. I’m still of the opinion that the EUR will weaken further so in time I do think GBP/EUR will push higher. I would look at 1.27 on a market order with 1.28 being a push for the remainder of 2014. Please contact myself or one of the trading team to implement an order.

Any questions please let me know.

Have a great week.

Written by Liam Alexander