The cold weather is starting to bite so that means overcoats on and annoyingly inane Christmas adverts that cost a trillion pounds to make that apparently have ‘meaning’. Nope, they’re just trying to sell as much as possible to as many people as possible. Welcome to the month before Christmas. Jingle all the way.
I would expect the currency markets to remain relatively subdued this week with all focus now turning to December and the Fed and ECB meetings. Indeed, with Thanksgiving holidays from Thursday this week may struggle to shift into gear. What is GBP/USD likely to do? I’d expect the downtrend to continue with a test of 1.50 the figure likely to occur in the coming weeks. Are you a US Dollar buyer? I would consider covering off some of your exposure at current levels as I don’t think we’ll see any sustained shift to the upside for the rest of 2015 and most of Q1 ’16. Indeed, I think it is as likely as Venezuela getting their inflation rate down from 200% prior to Christmas.
Are you a US Dollar seller? If so, I would look to cover off some of your requirement on a SPOT basis whilst leaving yourself some upside potential through utilising market orders. Please contact myself or one of the trading team to discuss appropriate levels to aim for. If you can achieve under 1.52 selling USD I’d suggest this is an excellent level to achieve on SPOT. I would then look at 1.5150/1.51 and 1.50 at a push before December. I would expect us to be trading sub 1.50 2nd week of December.
GBP/EUR? Fill your boots if you’re a Euro buyer. Could it go higher? Certainly. I would look at the 1.43 level as toppish at present however. If you can achieve 1.42 or above I would suggest this is a good level to achieve. Please contact myself or one of the trading team. It’s getting rather dull saying this although Mario Draghi, the ECB president, is expected to inject more QE into the Eurozone. With the ECB likely to place around 1 Billion Euro’s in QE into the market in December the markets may take that as a positive that there is support so the EUR may strengthen. However, on the downside, the markets may view it as yet another sign that the Eurozone project is being artificially supported therefore the EUR weakens and moves lower. As always, I’d suggest you have a strategy in place to mitigate any risk you have.
On the data front we’re light this week. We have GDP out of Germany tomorrow with US Durable Goods orders released on Wednesday. Other than that there isn’t too much of note.
The month of December will be here before we know it. We’ll all be trying to cram everything into the next 3 or 4 weeks before the festive season gets into full swing so please do have your currency requirements squared away.
Should anyone be in Mayfair in December and fancy a festive beer please do get in touch with a member of the Aston team.
If you have any questions let me know.
Have a great week.
Written by Liam Alexander