CURRENCY VOICE
www.abplgroup.com - Asian Voice 22nd November 2014
21
Foreign Exchange
Paresh Davdra is the Dealing Director of RationalFX,
Upward Trend In Wage Growth Currency Specialists.
GBP The headline unemployment rate stayed the same as the previous month at 6%. However, the data shows that a record number of people are now in work as the jobless total fell 115,000 in the quarter to September. Wage growth figures were released yesterday showing that wages excluding bonus' were up 1.3% in the three months to September. This is significant, as this is the first time in 5 years wage growth has been higher than inflation, signalling an end to the cost of living squeeze. The main event in the UK was the Bank of England's Quarterly Inflation Report. Mark Carney stated that plunging commodity prices, the recent weak wage growth and slowing global growth has triggered a drastic change of view on their outlook for inflation. They now expect it to take 3 years to return to the banks 2% target. GBP fell on the back of comments suggesting that the Bank of England expects to hold interest rates at 0.5% until around October next year. This is in contrast to the view held in August's inflation report where the Bank had been signalling that pre-election rise in February was most likely. Growth in 2015 has been
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revised slightly lower to 2.9% from the banks August forecast of 3%. They also expect the unemployment rate to fall to 5.7% by the end of 2015, however, the nature of job creation (young and low skilled) will weigh on wage growth. EUR According to the latest consumer prices data out yesterday Inflation in Greece fell to -1.7% in October, A decline on last months figure of -0.8%. As the Greek economy struggles with high unemployment and the impact of austerity measures imposed by the EU this is a further sign that their ailing economy is still on shaky ground. In Italy industrial production fell 0.9% in September with Economists only anticipating a 0.2% decline. That means that industrial production has shrunk by 1.1% over the last quarter, accelerating from a 0.5% decline in April-June. Overall this equates to Italian production being 2.9% lower than in September 2013. On a slightly brighter note, euro zone investor confidence has stopped falling, but remains close to an 18-month low. Industrial production data for the whole of the Euro zone YoY figures came in significantly above expectations at 0.6%, when it was
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forecast to slip by 0.3%. Reports have shown the German economy has narrowly avoided recession, growing 0.1% in the third quarter, with the economy contracting to 0.1% in the April-to-May quarter, another negative figure would have meant Germany entering recession. The statistics office said German consumers had increased spending strongly during the third quarter period, and that exports had also risen. The French economy grew faster than economists forecast in the third quarter as domestic demand helped it bounce back from a contraction in the previous three months. The Euro significantly strengthened on Friday after news emerged the euro-zone economy grew 0.2 per cent in the third quarter, according to official figures published by Eurostat, beating expectations of 0.1 per cent growth. Further good news for the euro-zone, Greece exited recession and entered growth for the first time since austerity measures were put in place. USD Despite the US being on a bank holiday for Veterans Day, Boston Federal Reserve bank president Eric Rosengren discussed the Feds fight for higher inflation. He believes the Fed should fight low inflation as vig-
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orously as it would a too rapid run-up in prices or risk the same sort of prolonged slow growth plaguing Japan and Europe. Failure to get inflation to the Fed’s 2 % target, raised the risk that investors and consumers would slip into deflationary thinking, changing their spending and investment patterns in ways that would further undermine growth. Applications for U.S. unemployment benefits rose more than forecast last week, representing a pause from a recent run of readings close to a 14-year low. U.S. consumer sentiment also rose in November to a more than seven-year high as falling unemployment and lower gasoline prices boosted views on both current conditions and expectations. The University of Michigan's preliminary reading on the overall index on consumer sentiment for this month came in at 89.4, the highest reading since July 2007, well above economists expectations. The Commerce Department’s retail sales figures used to calculate gross domestic product, climbed 0.5 percent in October after being little changed the prior month. The September reading was revised up from a previously reported 0.2 percent decrease.
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Weekly Currencies As of Tuesday 18th November 2014 @ 7pm
GBP - INR = 96.56
USD - INR = 61.71 EUR - INR = 77.38 GBP - USD = 1.56 GBP - EUR = 1.25
EUR - USD = 1.25 GBP - AED = 5.75
GBP - CAD = 1.77
GBP - NZD = 1.97
GBP - AUD = 1.79
GBP - ZAR = 17.25
GBP - HUF = 381.08
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