By Simon Eastman
The week so far has seen little movement on GBPEUR, which has traded within a half cent range, but we have seen significant gains for the pound versus the US dollar.
On Monday it was confirmed by Donald Trump and the Japanese finance minister that both sides had intervened in the FX markets. The reason? A 40-year high on USD-JPY, which seemed to be the icing on the cake for the frustrated Japanese.
Japan imports a huge amount of goods and the weak yen has been pushing up the price of goods and subsequently, inflation has been rising.
In typical Trump style, he admitted to intervening, citing the financial benefits, calling it “a signal of friendship”. He went to say “We have a good relationship with Japan. We’re very strong — very, very strong financially – and they are, you know, they have a weakening yen, and they wanted a little bit of help, and we’re always there for Japan. Japan’s been very good to us, with the exception, of course, of Pearl Harbor.”
This was corroborated by the Japanese finance minister who confirmed alongside US Treasury, they had purchased yen. It also said they would not hesitate to act again if necessary. A weaker USD makes imports cheaper and will help to increase US exports to Japan, hence financially benefitting both countries.
So for those looking to buy USD it might be worth locking in a deal now in case the recent sharp weakening reverses in the coming days and weeks.
Aside from market intervention, yesterday was quiet for data releases with nothing of note to report on. Today is not much busier, but we have some German PMI figures out just before 9am and EU producer prices figures at 10am. After lunch once the US markets open, we get two US PMI from the S&P global index and five from the ISM index, which all get released between 2.45pm and 3pm.
With the greenback in the spotlight again today, all the more reason to speak to one of the team about any upcoming trades you might have buying dollars, and with the GBPEUR rates still holding up at multi month highs, it could be worth locking a rate ahead of that completion once the EU come back from their summer leave.
Speak to one of the team today to see how we can help make your money go further.