It’s not like they beat them; they CRUSHED them. Oh, I’m talking about New Zealand cricket battle against the UK. What does it have to do with forex analysis you’d say? well, I woke up this morning to see Mr. Kiwi and Mr. Aussie high up on the forex dance floor against his counterparts for no apparent economic reason. and then after discussing the matter with my own Mr. Aussie, we came to the conclusion that this could have something to do with the massive tourist attraction in the countries for the cricket world cup, and furthermore, confirmation of New Zealand’s position as one of the 2015 Cricket World Cup favorites after demolishing England in Wellington on Friday.
Last week the Land Down Under printed weaker than expected jobs figures for January, pushing the Australian dollar lower against its forex counterparts, but now Mr. Aussie seems to be riding on the Kiwi’s new uptrend at least for the time being.
The other Side of the Rainbow
It’s not like the UK is doing everything in a poor manner though. Although Mr. British Pound has been dancing lower in the past two days, the UK economy’s January jobs report posted yet another upside surprise, which might be enough to keep Mr. British Pound supported against its forex counterparts.
We have seen four consecutive months of stronger-than-expected data with the U.K. printing revisions for the previous month’s report, showing a 35.8K decline in joblessness from the initially reported 29.7K drop. Wowzers!
The U.K. economy managed to bring its unemployment rate down from 5.8% to a 6-year low of 5.7% in January. Other labor indicators also reached record levels, with the employment rate surging to 73.2% – its highest level since records began in 1971.
Although weak wage inflation has been a major concern for the U.K. economy last year, the latest jobs release suggests that they’ve got nothing to worry about for now. Average hourly earnings climbed from an upgraded 1.8% reading to 2.1%, higher than the projected 1.7% figure.
This places wage growth significantly above the current annual CPI, which stood at 0.5% in December then tumbled to 0.3% in January. In fact, wage inflation has been outpacing consumer inflation for the past four months! Because of that, consumers can confidently increase their spending and take advantage of the drop in price levels.
If there’s any key takeaway from this upbeat jobs release, it’s that BOE Governor Carney makes a solid point in saying that the U.K. economy can survive the downturn in inflation and even emerge with stronger spending figures.
Do you think Mr. British Pound will reverse into an uptrend on the idea that the BOE’s next move might be a rate hike?
Strike Three: Greece vs. Europe
we’ve been talking about Greece and the EU a lot recently… And this might be one of the last times! European finance ministers are meeting today for the third time in two weeks to discuss the terms of Greece’s bailout. On Thursday, Germany rejected Greece’s application for an extension to its loan agreement.
The bailout officially expires on Feb. 28, putting pressure on the parties to come to an agreement. A number of the finance ministers must present the terms of a new deal to their respective country’s parliament for a vote.
European markets performed well yesterday on optimism that a deal would be reached with Greece. Though we will have to wait for the outcome of the euro-group meeting later today to see if the Germans will accept the Greek word play and are willing to sign off on what will basically be a short term problem solver.
However according to a CNBC analyst, the European Central Bank are pretty worried that speculators will target the debt of the continent’s peripheral countries if they fail to reach an accord on Greece’s bailout and the country exits the euro zone.
This could explain the drop we have been seeing today for Mr. Euro.