Major Global Economies Decline

Some of the world’s richest and most powerful economies saw an overall contraction of about 0.2%. The Organisation for Economic Co-operation and Development (OECD) which is made up of some of the largest economies in the world published a contraction of 0.2% which was the first contraction since 2009. The OECD stated that the weakness in the Eurozone, UK and Japan coupled with the fact that the US saw no growth resulted in the negative figure. This news highlights the problems that the global economy still face and the pressure that the leaders of the G20 are currently dealing with. It doesn’t look like there is to be a strong recovery for any of the major economies which means it is likely the currency markets will remain volatile as investors look to transfer their funds from one safe haven economy to another. I would not be surprised to see the currency markets remain volatile for some time to come and while the global economy remains under pressure currencies such as GBP could continue to struggle.

Japanese Yen (JPY) Weakness

Figures from Japan this morning have shown that their trade deficit has hit a record high in January due to the new aggressive monetary policy that was introduced by the new Prime Minister Shinzo Abe. This new monetary policy has hit the Yen (JPY) hard which has meant that their goods have become more affordable for foreign investors and so their exports have increased while their weak currency has meant that importing goods and services is now considerably more expensive. Japan are heavily dependant on their export market and so the new Prime Minister will be pleased in a way that his new policy has weakened the currency and helped their exports but with countries such as the US, UK and Eurozone struggling the demand, regardless of the currency strength, has been reduced. As Japan are the third largest economy in the world it will be important that we see their economy return to growth as this will only help the other major economies.

Bank of England Minutes

At 9:30am today we have the Bank of England (BoE) minutes due. These are from the latest interest rate decision where rates were kept on hold. There has been some speculation that one or two members of the BoE voted for an increase in interest rates and if the minutes show this then we could see Sterling strength today which could bring some good opportunities for those clients looking to buy Euros. So, to stay in touch with the latest news from the minutes make sure you speak to one of our experienced currency brokers today. You can call our team on 01494 849752 or alternatively email me directly on trh@currencies.co.uk