No Northern Hemisphere team in the Rugby Semi Finals. Great. The Aussies can go throw a few shrimps on the barbie as far as I’m concerned. To our Australian clients I do of course say that in jest; albeit only slightly. Guess it is back to watching the "British Bake Off" or whatever is in vogue these days.
The main event this week will be the ECB press conference in an otherwise quiet week data wise. Will Mario Draghi give hints of further stimulus? I think it is a question of when not if QE is injected. With the Eurozone recovery suffering from continuing global market volatility, an emerging market downturn, slowing international trade and a commodity price slump then it doesn’t take a genius to work out that things are coming to a head. The tone and language of Draghi’s message will be key with expectations of a 6 month extension to QE likely to be announced at the December 3rd meeting. There is a very small chance he may commit to this on Thursday although I think that would be premature.
Where now for GBP/EUR? It will depend on Thursday. If you have a requirement to purchase Euro’s I would suggest thinking about placing a market order to the upside around 1.3650/1.37. Please contact myself or one of the trading team to discuss implementing an order. With EUR/USD failing to break higher and Nowotny (Austrian member of ECB’s Governing Council) sending the Euro lower last week with his comments on inflation we may see further downside for the Euro this week.
Conversely, if you are a Euro seller I would again look to place orders to the downside to execute at. I think we’ll drift slightly higher this week so you may want to consider covering off some on a SPOT basis whilst allowing room for any moves in your favour over the coming weeks. Please contact me to discuss.
Back to 1.55? We’re back in no-man’s land again under this level and will flicker around like an emission light on a Volkswagen until we have clear direction over 1.55. If you are a USD buyer I would look to secure around 50% of your exposure up until December at this rate. Should it go higher you allow yourself room to take advantage of any further moves. Please contact me to discuss implementing firstly a market order at 1.55 then strategy for the rest of Q4 on Cable.
If you have any questions on the above please do let me know.
Have a great week.
Written by Liam Alexander