Rational FX: Yen and Swiss Franc continue growing in strength [24/12/2010]

Rational FX: Yen and Swiss Franc continue growing in strength [24/12/2010]

It is important to notice that the Yen and Swiss Franc has strengthened significantly over the last four weeks against all major pairings. Copper has also gained significant ground as well as gold, silver and other precious metals. All of these are seen as safe havens – however it is not right to say that investors are piling into safe havens because of just Europe and Korea… We have also seen negative figures from all the major economies, plus this Christmas we have has severely bad weather coupled with many Bank Holidays falling during the working week – this has prompted more people to not come into work and this has resulted in thin trading.

Below are the main points, however we feel that they are currently of little relevance as mentioned previously there is very thin trading. We are more likely to see traders close positions and move funds into safe haven currencies until the New Year.

Andrew Sentence, a BoE member is also openly indicating that we are likely to see a consecutive raise in interest rates sooner rather than later! This will have a positive impact on the UK Pound.

Yesterday’s Market Movers

  • French Consumer Spending came in much higher than expected and showed a sharp reversal from the previous month,  we did see it gain a few pips against the US dollar – but again nothing to brag about!
  • UK Mortgage Approvals which were expected to come out better, actually disappointed and only kept the downward trajectory for Sterling over the past few days.
  • US Durable Goods excluding volatiles increased to their highest pace since March. However, including volatiles, like aircrafts, the figure continued its downward decline albeit at a slower pace than the previous month. Durable Goods are those goods used by businesses like computers, industrial equipment and steel, and a positive figure indicates that businesses are investing, which will no doubt be beneficial to productivity going forward.
  • US jobless claims slid over the previous week, the 4 week average has dropped by 3,000 but the seasonally adjusted figure has risen. Which goes to show that employers are still not overly confident about hiring permanent workers just yet.
  • Also, personal spending rose 0.4 percent in November, positive but, at a slower pace than previous, showing that consumers are spending.
  • The big figure yesterday was the Michigan Consumer Confidence, continuing positive outlook with the figure holding well above 75 and any figure above 50 indicating optimism
  • USA New Home Sales fell short of expectations, and rose less than expected. New Home Sales feed into New Home Permits, Construction, Employment and the wider economy and is a closely watched figure at the moment as the USA tries to steer itself out of the recent financial crisis

Today’s Market Movers

There’s no data out today, and the major economies are having a Bank Holiday. Have a very Merry Christmas. May peace, love and prosperity follow you always 

We wish you a very nice day.


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