FX Monthly movement
- US$/£ 1.29 No change
- US$/€1.13 changed from 1.02
- £/€ 1.13 changed from 1.15
Sterling re-established itself at levels against the US Dollar that were last seen prior to the result of the UK General Election a month ago, touching 1.30 briefly at the close of June. The reason for the about turn on Sterling were the comments made by the Bank of England Governor Mark Carney who, from a week earlier had said that an interest rate hike was unlikely which had led to a selloff in the pound, to hawkish comments that the Bank would start to reduce Quantitative Easing and that they would need to manage inflation = interest rate increase?
Sterling had also been under pressure from Brexit prior to the ‘official’ talks starting in June but the apparent consensus that it will be a ‘soft’ Brexit limited the downside on the Pound.
Looking forward, Sterling will still be sensitive to Brexit discussions and resulting comments but with the topic of interest rate rises strong on the agenda, it should find some support going forward.
Despite the possibility of two further interest rate rises by the Fed in the second half of his year, current US economic data continues to be a mixed bag which could mean that further rate rises may damage future growth prospects. Donald Trump is still struggling to implement any of the fiscal plans he promised in his Presidential campaign so the USD may now struggle to any significant gains.
The Euro did strengthen during June based on comments from ECB saying they would look to end QE, that inflationary pressures were increasing and the Greek bailout had all been patched up. The markets saw this as a positive move for the Euro, to the point that their comments had pushed the Euro to high which they then had to correct, saying that they had been misinterpreted by the markets. This softer tone by Europe coincided with the comments from the Bank of England which were sterling positive which combined, led to US Dollar weakness against both currencies.
China posted a surge in exports (+8.7% yr on yr) and imports (14.8% yr on yr) in May which signals an improvement in the world’s second biggest economy but despite this, comments from Beijing suggest this is growth is unlikely to continue.
Markets are starting to move to reflect the new crop sentiments. The Sunflower continues to be very competitively priced whilst the Pumpkin low levels are gone and producers rush in to increase the prices needed to make investments in their plants possible and cover losses from the previous season.
The other seeds currently have relatively stable pricing until more decisive action from buyers and sellers alike take place. Holidays are nearly upon us, so little action is expected over the next couple of months.
In this report:
- Pumpkinseed kernels
- Sunflower seed kernels
- Sesame seed
- Hulled millet
- Poppy seed
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