Unveiling 2024: Market Outlook and Key Trends Get your free copy
-
UK
- Australia - English
- België - Nederlands
- Belgique - Français
- Brazil - Portuguese
- Canada - English
- Česká Republika - Čeština
- Deutschland - Deutsch
- España - Español
- France - Français
- Ελλάδα - Ελληνικά
- Hong Kong - English
- Hong Kong - Traditional Chinese
- Italia - Italiano
- Luxembourg - English
- Nederland - Nederlands
- Polska - Polski
- Portugal - Português
- România - Română
- Schweiz - Deutsch
- Suisse - Français
- Sverige - Svenska
- United Arab Emirates - English
- United Kingdom - English
Contact our experts
Ebury London
100 Victoria Street
London
SW1E 5JL
+44 (0) 20 3872 6670
[email protected]
Ebury.com
Dovish Fed boosts emerging market currencies as Sterling plummets on hard Brexit fears
- Go back to blog home
- Latest
4 February 2019
Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.
The Federal Reserve surprised markets at its January meeting with a statement that was considerably more dovish than expected, and appeared to put a high hurdle for any further interest rate hikes in 2019.
Economic data releases are thin next week. Currency markets will take their cue mostly from political headlines, particularly the Brexit negotiations and progress in the US-China trade talks.
Major currencies in detail
GBP
Sterling performed very poorly last week. Parliament backed an amendment that sent Theresa May back to the EU for further concessions. EU negotiators state that these are impossible. Consequently, although a delayed Brexit is still the most likely outcome in our view, the chances of no deal have increased marginally. Markets clearly saw it last week, sending the Pound sharply downward, particularly against the Euro. The Nissan announcement over the weekend that it’s cancelling plans to build SUVs in Britain over Brexit should add to the short term gloom on Sterling.
EUR
It was a mixed week of macroeconomic news out of the Eurozone. Negative news on Italian GDP was somewhat balanced out by a stronger than expected core inflation reading for January. Currency markets sent the Euro higher on the back of the latter and, more critically, the very dovish FOMC statement earlier in the week. It looks like if the economic newsflow doesn’t deteriorate further, the Euro may rally modestly in the short term as markets digest the dovish turn at the Fed.
USD
The Federal Reserve surprised markets last week with a very dovish statement, the tone of which was confirmed by Chair Powell in the press conference following. The statement suggested that, absent macroeconomic surprises, the Fed is done hiking for the time being and has become entirely data-dependent. The Dollar fell in the immediate aftermath of the meeting against all major currencies, and financial markets worldwide celebrated. The critical payroll report following the meeting on Friday should not significantly change the Fed’s view. Strong job creation continues to go along with moderate wage increases amounting to roughly 1% in real terms. We think the Fed’s change in tone further confirms our generally bullish view on emerging market currencies.
Cookies and Privacy
This site uses cookies to ensure you get the best experience. For more information see our Privacy NoticeAccept Settings Reject
Privacy Overview
Cookie | Duration | Description |
---|---|---|
cf_use_ob | past | This cookie is set by the provider Cloudflare content delivery network. This cookie is used for determining whether it should continue serving "Always Online" until the cookie expires. |
cookielawinfo-checkbox-advertisement | 1 year | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Advertisement". |
cookielawinfo-checkbox-analytics | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics". |
cookielawinfo-checkbox-functional | 11 months | The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional". |
cookielawinfo-checkbox-necessary | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary". |
cookielawinfo-checkbox-others | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other. |
cookielawinfo-checkbox-performance | 11 months | This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance". |
viewed_cookie_policy | 11 months | The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data. |
Cookie | Duration | Description |
---|---|---|
_ga | 2 years | This cookie is installed by Google Analytics. The cookie is used to calculate visitor, session, campaign data and keep track of site usage for the site's analytics report. The cookies store information anonymously and assign a randomly generated number to identify unique visitors. |
_ga_P8154YCRDP | 2 years | This cookie is installed by Google Analytics. |
_gat_gtag_UA_51187572_50 | 1 minute | Google uses this cookie to distinguish users. |
_gid | 1 day | This cookie is installed by Google Analytics. The cookie is used to store information of how visitors use a website and helps in creating an analytics report of how the website is doing. The data collected including the number visitors, the source where they have come from, and the pages visted in an anonymous form. |
_hjFirstSeen | 30 minutes | This is set by Hotjar to identify a new user’s first session. It stores a true/false value, indicating whether this was the first time Hotjar saw this user. It is used by Recording filters to identify new user sessions. |
_hjid | 1 year | This cookie is set by Hotjar. This cookie is set when the customer first lands on a page with the Hotjar script. It is used to persist the random user ID, unique to that site on the browser. This ensures that behavior in subsequent visits to the same site will be attributed to the same user ID. |
CONSENT | 16 years 4 months 14 hours 27 minutes | These cookies are set via embedded youtube-videos. They register anonymous statistical data on for example how many times the video is displayed and what settings are used for playback.No sensitive data is collected unless you log in to your google account, in that case your choices are linked with your account, for example if you click “like” on a video. |
pardot | past | The cookie is set when the visitor is logged in as a Pardot user. |
Cookie | Duration | Description |
---|---|---|
IDE | 1 year 24 days | Used by Google DoubleClick and stores information about how the user uses the website and any other advertisement before visiting the website. This is used to present users with ads that are relevant to them according to the user profile. |
test_cookie | 15 minutes | This cookie is set by doubleclick.net. The purpose of the cookie is to determine if the user's browser supports cookies. |
VISITOR_INFO1_LIVE | 5 months 27 days | This cookie is set by Youtube. Used to track the information of the embedded YouTube videos on a website. |
YSC | session | This cookies is set by Youtube and is used to track the views of embedded videos. |
yt-remote-connected-devices | never | These cookies are set via embedded youtube-videos. |
yt-remote-device-id | never | These cookies are set via embedded youtube-videos. |
Cookie | Duration | Description |
---|---|---|
_lfa | 2 years | This cookie is set by the provider Leadfeeder. This cookie is used for identifying the IP address of devices visiting the website. The cookie collects information such as IP addresses, time spent on website and page requests for the visits.This collected information is used for retargeting of multiple users routing from the same IP address. |