FX Market Overview
 
In a quiet day of trading with many markets closed for the Armistice day ceremonies,  the data that we did receive was all pretty poor. A dire housing market report and the first drop in the British retail Consortium’s sales monitor since 2005 knocked confidence in the UK economy and even the expectation of lower interest rates failed to stimulate any enthusiasm for Britain’s economic prospects.

Today is also all about the UK data with the Bank of England’s quarterly inflation report taking on a whole new level of interest as it is widely expected that they will point to far lower interest rates in the medium term. Some commentators are already citing target rates of 1.5 percent in the year ahead and, whilst we might have scoffed at that a few months ago, we could not rule that kind of level out in the current conditions. We will also be treated to the UK employment data and I think we all know that will be bad news. So it can be no surprise that the Pound is wallowing at the bottom end of its exchange rate ranges on most fronts.

In fact there is almost no other data than that from the UK today so those traders returning from their days away from their desks will have a free run at the Pound unhindered by other news.   Another day of poor UK data may well be the straw that breaks the camel’s back and I am fearful that we could see much lower levels in the value of the Pound against the Euro, Australasian and North American currencies.

I am fully aware that these reports have become quite depressing in the last weeks but it is hard to find good news these days and traders and investors are eagerly seeking the least bad place to lodge their funds hence the strength in the Japanese Yen, Swiss Franc and ironically the US Dollar which is benefitting from the demand for US Treasury bills; the securest form of government debt known to man. While these angst-ridden conditions prevail, we can expect further volatility and further surprises. So if there is good news (perhaps I should write that in neon lights); YES THERE IS SOME GOOD NEWS, it is that anyone looking to buy Sterling ought to be making serious amounts of hay while the sun is blazing and anyone planning to sell Sterling is almost certain to get unexpected chances amidst the ‘headless chicken’ trading days that will undoubtedly appear from time to time over the coming months. Preparation for those events is a matter of setting out your stall with your Halo Financial Consultant and placing your requirements on record so that they can be monitored, turned into automated orders or structured in a way that will suit your needs and funds availability.
 
And finally, the Royal Society for the Protection of Birds has offered this advice to those who want to feed feathered garden visitors and not the squirrels. Sprinkle the bird feed with chilli powder. Apparently the birds don’t mind but squirrels hate it.  I guess it may well work in the short term but judging by the adaptability of the squirrels in my neck of the woods, they’ll soon be turning up with their own tacos and salsa sauce and marinating their chestnuts.

***STOP PRESS*** UK unemployment hits 1.8 million, the worst reading in a decade.
 
 
Currency - GBP / Australian Dollar 

 
Sweeping cuts in Australasian interest rates have been matched by the 2 percent cut in UK interest rates in just two months. Sterling, as a consequence, is being sold as it is no longer the relatively high yielding safe haven that it once was. The Pound is also out of favour due to analysts and economists pointing to a rather steeper decline into UK recession that other countries are facing as well as a longer term climb back to prosperity. The Australian economy on the other hand, has the luxury of being a major exporter of mined commodities including many used in the building trade and China, which announced an economic rescue plan worth $586 billion this week, is expected to be ready to spend rather a lot of that money on construction.  So we started this week with the Sterling - Australian Dollar exchange rate back at the low levels last seen in early October and a every  expectation that this pair would decline to the A$ 2.24 level. However, Sterling hasn’t capitulated yet and the very thin trading conditions yesterday saw this pair spike to A$ 2.37 for a few fleeting moments. Today’s data is expected to be poor and the BoE report should point to lower interest rates which in the long term may well be good for the Pound but in the short term are likely to whip support away from beneath the poor GBP. If this does happen then expect interim support around the 76.4 percent Fibonacci retracement level at A$ 2.24, may well provide interim support and could even trigger a bounce back to the A$ 2.29 level but if it fails to turn this pair around, the nest Sterling buying interest won’t be seen until we get down to A$ 2.18. If you missed the highs last month, it may be time to bite the bullet and buy some of your requirements before the markets rob you of another 5 percent of your money.
 
Currency - GBP / South African Rand 
  
  
After the dive from R 19.31 to just R 15.18 in just 10 working days, there had to be a period of consolidation in the Sterling - South African Rand exchange rate. That is precisely what we have seen in the last three working days. Usually consolidation takes the form of a period of narrow trading ranges and the market closing at roughly the same exchange rate that it opens at. However, the Sterling - SA Rand exchange rate is nothing like normal; this period of consolidation has involved a range from R 15.18 to R 16.18 and we are perched in the middle of this range right now. The momentum is still pointing towards lower exchange rates but there is every chance of volatility continuing in this pair. What with changes in SA political parties, exceptionally high interest rates, very high inflation and financial uncertainty, only a fool would rule out further sporadic SA Rand weakness but the UK economy is susceptible to further problems as well so GBP weakness cannot be ruled out either.  If I were a buyer of SA Rand, I would target R 15.90 with an automated market order and if I were a seller of SA Rand, I would place a similar market order but at R 15.50.
 
Your mission should you choose to accept it is….
 
One of the trickiest things for new learners of English to grasp is the varying pronunciation of the same group of letters.  A prime example of this is the combination "ough" which can be pronounced in no less than nine different ways.

The following sentence contains them all. If you want to test yourself, then I suggest reading it out loud in the middle of your office. It’ll get the day going by giving your colleagues a laugh if nothing else.

"A rough-coated, dough-faced, thoughtful ploughman strode through the streets of Scarborough; after falling into a slough, he coughed and hiccoughed."
 
 
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