Monday 18th February

Last week we began to see a little confidence returning to the FX market on the back of better than expected US January retail sales numbers and the December trade balance. However that brief lived confidence took a heavy knock on Friday as a series of bleak economic reports showed the mood of the American consumer deteriorating in February to a point that has usually signalled recession whilst factory activity in New York state suffered its biggest drop on record. Added to this, further data suggested bubbling price pressures thus raising the possibility of a slowing economic growth and rising inflation….'stagflation'.

So overnight the FX market has been relatively quiet although the good old Aussie has jumped to a 3 month high against the USD boosted by its very attractive yield advantage and a chance of further hike by the RBA in March. Keep the disciplines of the T/R's.