DAILY REPORT: Monday 25th February 2013

The pound declined to its lowest level against the USD dollar since July 2010 closing the week at 1.5163. This was largely due in part to Moody’s Investor Services cutting the
UK’s credit rating from AAA to Aa1 on Friday, citing weakness in the nation’s growth outlook. Earlier in the week the minutes released from the Bank of England’s monetary
policy meeting on Feb 7 indicated Bank of England Governor Mervyn King backed more stimulus in the form of increasing bond purchases. The vote was split 6-3 against
the move but it has increased market expectations of further quantitative easing in the coming months from the central bank. The pound has depreciated against most major

Read more: DAILY REPORT: Monday 25th February 2013

DAILY REPORT: Tuesday 19th February 2013

FX and commodities remained mostly subdued in yesterday’s local session, trading sideways for the most part. Activity was curtailed by the closure of markets in the US
for the Presidents' Day holiday. Offshore equity markets were soft on lingering concerns about the economic outlook, especially for the euro zone. While the risk of an inconclusive outcome in Italy's forthcoming election added to investor concerns. In the commodity markets, traders played catch-up after a week-long holiday last week in

Read more: DAILY REPORT: Tuesday 19th February 2013

DAILY REPORT: Wednesday 13th February 2013

Early on in the London session yesterday the G7 released a statement that explicitly discussed the group’s policy towards currency manipulation. Initially, investors read the
report as supportive of Japan’s recent market interventions and caused a further sell-off in the Yen back towards the Asian high of 94.40. The Yen was also sold on comments
from a US foreign correspondent who affirmed his nations support for Japan’s efforts in stabilizing inflation and boosting growth – implicitly approving the recent action to
depreciate the Yen. However later in the evening Reuters reported that a G7 official said the statement had been misinterpreted by the media and reaffirmed the group’s position against currency manipulation. The official also said that the G7 is concerned about unilateral guidance on the JPY and mentioned Japan will be a spotlight at the G20

Read more: DAILY REPORT: Wednesday 13th February 2013

DAILY REPORT: Friday 22th February 2013

Over the past 48 hours the markets have seen a pull back in risk sentiment with most markets taking a hit. This week has been dominated by investor reaction to the board minutes released by both the Federal Reserve and the BOE. The market's response to the FOMC minutes mirrored the reaction that followed the December minutes - equities
heavily sold, bonds sold and USD strength. Overnight was no exception, not helped by the economic data released in Europe and the US. The Euro zone flash PMIs for February seemed to disappoint market expectations, resulting in the EUR being sold

Read more: DAILY REPORT: Friday 22th February 2013

DAILY REPORT: Monday 18th February 2013

The Group of 20 finance chiefs this weekend sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a
global currency war without singling out Japan for criticism. New BoE chief Mark Carney told Canadian law-makers earlier this week there has been “some concern” that Japan’s move to set a 2% inflation goal will affect its exchange rate. Carney steps across to take the reins of BoE after a successful term steering Canada through the GFC. When asked about the UK's current monetary policy stance, “there is a lot more

Read more: DAILY REPORT: Monday 18th February 2013

DAILY REPORT: Tuesday 12th February 2013

The Euro had a mixed performance last night as Euro zone members and the global financial leaders made comments ahead of the G20 economic summit later this week. The president of the German Bundesbank and a member of the ECB council, Jens Weidmann, said the Euro isn’t currently overvalued and warned the ECB from pursuing a policy to weaken the currency. The G20 group has been actively discussing the ‘currency wars’ whereby some nations are viewed as deliberately weakening their currency for the purpose of boosting growth. Japan has been in the spotlight for the past

Read more: DAILY REPORT: Tuesday 12th February 2013

DAILY REPORT: Thursday 21th February 2013

The January FOMC Minutes revealed a wide spilt over the conduct of asset purchases with many participants expressing concern about the potential costs and risks of further asset purchases. Several felt that the Committee should be prepared to vary the pace of future purchases while "a number" felt that the Fed may want to taper or end the purchases even before a substantial improvement in the labor market was achieved. Alternatively, several argued that the cost of reducing or ending purchases too soon was
potentially significant with some members warning about the historical experience (would guess 1936/37 was on their minds) of premature withdrawal leading to adverse

Read more: DAILY REPORT: Thursday 21th February 2013

DAILY REPORT: Friday 15th February 2013

The Japanese Yen has met resistance multiple times in the past two days and has slid lower as a result of G20 discussion and local monetary policy commitments. The Bank of Japan met yesterday and decided to leave interest rates and the current asset purchases program unchanged. While there has been strong direction from the Japanese government to boost growth through central bank activities, new programs aren’t expected to start until 2014. The USDJPY will continue to come under pressure if the recent market interference by the Japanese government comes under scrutiny at

Read more: DAILY REPORT: Friday 15th February 2013

DAILY REPORT: Monday 11th February 2013

A divergent week for risk as the Japanese market leadership faded but overall risk held together. Specifically we saw the USDJPY and the Nikkei both rally to new highs (just over 94 and 11,500 respectively) early in the week but reverse by Friday and ultimately finish near unchanged at 92.75 and 11,150. Headlines by the Japanese finance minister that the pace of currency weakness was unexpected and potentially too quick seemed to be the catalyst for the reversal. In Europe, the EUR faced the opposite concerns as investors expressed concern that the currency had strengthened too much

Read more: DAILY REPORT: Monday 11th February 2013

DAILY REPORT: Wednesday 20th February 2013

Some moderate risk-on buying was seen overnight, pushing the EUR & AUD up against most of its peers. Market optimism was bolstered as the German ZEW report showed
German economic sentiment in February hit its highest level since April 2010 (48.2 vs 35.0 expected, 31.5 prior). So it seems the two-tiered economy continues in Europe with
Germany and France leading the charge. The news helped wet investor appetite for risk after the promising sign that Europe’s top economy may in fact skirt recession, but we
will have to wait and see what the more important Euro zone flash PMI's say on Thursday and German IFO business sentiment on Friday. Equities were strong

Read more: DAILY REPORT: Wednesday 20th February 2013

DAILY REPORT: Thursday 14th February 2013

In an attempt to further clarify the confusing policy statement from Tuesday night, a G7 ‘source’ has come out overnight saying the group aren’t concerned about the actual
level of the Yen, only in the speed in which it has depreciated. The JPY didn’t react to this development with markets probably more inclined to wait for confirmed policy given that recent rumors have been contradictory. The Euro fell back overnight after Portugal grabbed headlines with weaker jobs figures and concern ahead of Euro zone growth

Read more: DAILY REPORT: Thursday 14th February 2013

DAILY REPORT: Friday 8th February 2013

EUR tumbled overnight on the back of Draghi’s comments that the currency’s strength could hamper the economic recovery. He stated that “the exchange rate is not a policy
target, but it is important for growth and price stability” and that “we want to see if the appreciation is sustained, and if it alters our assessment of the risk to price stability.” The comments pushed the EUR to a low of 1.3371 and we are currently settling around the 1.34 level. Draghi highlighted that the recovery will come later in the year and downside risks were still of concern. Also in Europe, the Irish govt reached an agreement with the ECB after moving to liquidate former Anglo Irish. The govt claimed

Read more: DAILY REPORT: Friday 8th February 2013