ACM Update 03-10-22

Written by: Liam Alexander
Date posted: 03-10-22

Another quiet week in the markets with little to report. By the time I’ve finished the first paragraph inevitably it will be redundant.

Cable (Sterling/Dollar) hit a 37 year low of 1.03. We have since recovered into the 1.12s. You can view the recent movements in the graph below –


Cable YTD is down 17%. Are calls for parity now over or is there further downside for Sterling to come? There was blood in the water last week although a modicum of balance is returning to the markets. However, headline risks remain and with the Conservative Party conference this week under intense scrutiny expect any ill judged or timed soundbites to be ceased upon.

Sterling/Dollar will continue to trade in a chaotic manner until we get some further confidence from the Bank of England. It seems almost certain a 100bps increase at the November meeting will take place. This should restore some investor confidence in UK PLC.

I would expect Sterling to make some ground on the Dollar in Q4. However, we all know rather too well that nothing is a given. If you are holding USD and need to move back into GBP consider covering off more of your exposure. Yes, we’re not at 1.03/1.04 levels although if you can trade in the 1.12s/1.13s then you’re still in a good position. If you would like updated rates or to discuss technical levels please reach out to the team and they’ll be happy to assist.

Sterling/Euro is trading in the 1.14s. You can view the movements in the graph below –


Entrenched inflation in the Eurozone and the ongoing energy crisis response is capping any Euro upside. As they would say in Game of Thrones “Winter is coming”. German wholesale food prices were up 19% in September to paint a picture.

If you hold GBP and need to move into EUR consider capturing some of the recent gains and lock in a small percentage of your exposure on a SPOT basis. In addition, consider implementing take profit orders to the upside as I believe there may be some further upside.

If you would like a member of the team to reach out to you directly, please let me know.

On a positive note, we are in fact not yet in a recession. Small mercies and all that.

Have a fantastic week and start to Q4.

Data this week

  • Monday – USD: Institute for Supply Management, Manufacturing PMI (Sep). Exp 52.3 (52.8).
  • Tuesday – AUD: RBA Interest Rate Decision. Exp 2.85% (2.35%).
  • Wednesday – USD: ISM Services PMI (Sep). Exp 56 (56.9).
  • Thursday – EUR: Retail Sales (YoY, Aug). Exp -1.7% (-0.9%).
  • Friday – USD: Nonfarm Payrolls (Sep). Exp 250K (315K).