SLIDE 1
Caxton FX 4 Grosvenor Place, London, SW1X 7HJ Call us on: 0845 658 2223
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Richard Driver Currency Market Analyst SMMT Open Forum 20 - - PowerPoint PPT Presentation
Richard Driver Currency Market Analyst SMMT Open Forum 20 - - PowerPoint PPT Presentation
Richard Driver Currency Market Analyst SMMT Open Forum 20 September 2011 Caxton FX 4 Grosvenor Place, London, SW1X 7HJ Call us on: 0845 658 2223 Sterling Outlook Sterling Overview Sterling /Yen Sterling /Euro Sterling /US Dollar Sterling
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SLIDE 3
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Sterling Overview
- Undervalued
- Low growth
- Low interest rate/Quantitative easing?
BUT:
- No intervention
- Safe-haven appeal?
- Tough on debt AAA
SLIDE 4
- Struggling economy/Rock bottom interest rate
- Political instability/High Debt- Loss of AAA
- But GBP/JPY close to all time lows of around 1.20.
Why?
- Safe haven
- Repatriation of funds
- Carry trade reversal
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Sterling/Yen
SLIDE 5
- What can curb yen strength?
– Solution to debt crisis – Upturn in global growth/Increased risk appetite – Currency Intervention. Outlook
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Sterling/Yen
6 months 12 months 18 months 119.00 139.00 150.00
SLIDE 6
- Hawkish ECB: Interest rate differential
- Asian sovereign diversification
- Sterling weakness -€1.10
- Dovish ECB outlook
- Escalating debt crisis
– High debt/Negative Growth= debt downgrades – Record Bond yields ->Bailouts – Contagion – ECB bond-buying – Bailout fund inadequate, German patience wavering, Weak European Banks, Slower Eurozone growth
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Sterling/Euro
SLIDE 7
- Greek default
- Italy and Spain
- Long-term solution? Eurobonds?
Outlook
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Sterling/Euro
6 months 12 months 18 months 1.20 1.22 1.16
SLIDE 8
- Dovish Fed
- Ultra-low interest rates
- Carry trade
- Economic soft patch
- Debt downgrade
BUT:
- Safe-haven
- Uncertain outlook
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Sterling/US dollar
SLIDE 9
Outlook
- Near-term dollar to outperform
- Beyond – debt downgrades, dovish Fed
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Sterling/USD
6 months 12 months 18 months 1.55 1.63 1.70
SLIDE 10
GBP/CNY
- Booming economy
- Soaring Inflation/ Gradual appreciation
GBP/BRL
- Rate Cut
- Slowing Growth
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Sterling/BRICS
6 months 12 months 18 months 10.0 9.70 9.60 6 months 12 months 18 months 2.85 2.95 2.7
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GBP/INR
- Interest Rate Differential
- Slowing Growth/High inflation
GBP/RUB
- Commodity decline
GBP/BRICS
6 months 12 months 18 months 77.5 80.0 75.0 6 months 12 months 18 months 49.50 52.00 48.00
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SLIDE 12
Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223
Caxton are pleased to provide free currency reports on request. Please contact Currency Analyst Richard Driver. Email: richard.driver@caxtonfx.com Tel: 0207 201 0561