Laurence Fletcher http://blogs.reuters.com/laurence-fletcher Laurence Fletcher's Profile Sun, 15 Mar 2015 23:00:11 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Valeo bets on hybrids, self-driving cars to beat industry growth http://uk.reuters.com/article/2015/03/15/uk-valeo-targets-idUKKBN0MB10720150315?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/laurence-fletcher/2015/03/15/valeo-bets-on-hybrids-self-driving-cars-to-beat-industry-growth/#comments Sun, 15 Mar 2015 22:19:18 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1181 PARIS (Reuters) – French auto parts maker Valeo (VLOF.PA: Quote, Profile, Research) pledged on Sunday to outgrow global vehicle production in the coming five years through an expansion into connected cars, autonomous driving and hybrids.

Before a Monday investor presentation in London, Valeo said it would boost sales to 20 billion euros (14.25 billion pounds) by 2020 from 12.7 billion last year, outstripping overall industry growth by an estimated 5 percentage points annually.

Valeo said its “increasing footprint in high-growth regions” would beat the market, with Asian sales rising to one-third of the group total from 28 percent last year.

It also intends to raise its operating margin to 8 percent by 2017 from 7.2 percent last year, with profitability remaining in the 8-9 percent bracket at the end of the decade.

Paris-based Valeo is pushing into fast-selling hybrid technologies, which help cut fuel consumption and CO2 emissions, as well as connected and self-driving cars.

The supplier announced a deal with Mobileye (MBLY.N: Quote, Profile, Research) on March 11 to use the Israeli tech company’s image processors in autonomous driving and collision-avoidance applications.

Valeo’s shares have risen 36 percent this year – outstripping the broader sector – and 5.9 percent in the past week alone, ahead of the strategy presentation.

“Valeo will continue to show best-in-class organic growth,” London-based UBS analyst David Lesne said in a recent note.

Annual sales of efficiency-boosting electric superchargers alone may rise above half a billion euros by 2019 from a negligible level last year, Lesne added.

Monday’s presentation offers a “potential catalyst to the share price”, JPMorgan analyst Jose Asumendi predicted.

Valeo also said it aimed to convert more than 30 percent of earnings before tax, depreciation and amortization into positive free cash flow by 2020 – compared with 21 percent last year.

The investor presentation is scheduled to begin at 1000 GMT (10.00 a.m. BST) on Monday and will be broadcast live on the Valeo website.

(Additional reporting by Gilles Guillaume; Editing by Ruth; Pitchford)

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Hedge funds battle to show their worth in EM sell-off http://www.reuters.com/article/2014/02/28/markets-hedgefunds-idUSL6N0LV24P20140228?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/28/hedge-funds-battle-to-show-their-worth-in-em-sell-off/#comments Fri, 28 Feb 2014 17:23:47 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1176 LONDON/PARIS, Feb 28 (Reuters) – A sell-off in emerging
markets has given hedge funds a chance to prove they can profit
from even the most testing market conditions – and try to
justify their lucrative fees.

These are conditions in which hedge funds are meant to be
able to outperform, using their much wider array of trading
tactics to capitalise on default risks, currency routs and share
price falls.

After underperforming regular stock benchmarks for the past
five years, this year they have just about managed to beat the
market, according to Hedge Fund Research’s HFRX index, gaining
0.9 percent this year to Feb. 25 compared with a 4.7 percent
fall in the MSCI Emerging Markets index and a 0.3
percent gain in the S&P 500 Total Return index.

Even so, some are struggling, as shown by Brevan Howard’s
decision to shut its $2.3 billion emerging markets fund.

Analysis by asset manager BlackRock of last year’s hedge
fund performance underlines the wide divergence in perfomance. link.reuters.com/hab37v

An investor who chose the most successful hedge fund
strategy last year – equity hedge, for example – could have seen
outperformance, or alpha, of around 20 percent in the best
performing funds or minus 15 percent in the worst.

Even the top funds would have lagged a pound, dollar or euro
invested in a major index such as the Standard & Poor’s 500
, up 30 percent.

But pension funds and others with a lower risk threshold
also use hedge funds because their greater tactical scope adds
to the options for achieving less volatile, and in some cases
more profitable returns than just tracking the market.

“Last year, you could just buy beta (track the market) in
both equities and credit, and sell gold and Bunds. This year …
it’s much more complicated,” Philippe Ferreira, head of
research, alternative intestments, at Lyxor AM.

“In this context, investing in hedge funds is a good way to
get protection and decorrelation with the market, and in that
sense hedge fund performance in January showed they did just
that: strategies with less directionality producing positive
results while stock indexes fell.”

In fund management overall, market-tracking “passive”
strategies are expected to grab market share from “active”
strategies by 2020, a recent study from consultants PwC found.
But assets under management in alternative investments, which
include hedge funds, will more than double to $13 trillion, PwC
said.

The wide spread of absolute returns found in the BlackRock
analysis is even more marked when comparing the amount of
outperformance generated by the funds.

Using the example of last year’s top returning strategy,
equity hedge, for example, the study found the average fund
actually detracted from the performance, while strategies such
as event-driven added nearly 4 percent of alpha.

“The dispersion shows the average hedge fund return is very
different from what’s available in the hedge fund universe,”
said Mark Woolley, hedge fund analyst at BlackRock, adding that
“the greatest return does not necessarily mean the greatest
amount of alpha”.

GRIND HIGHER

A bounce off January lows has given way to a slow grind
higher on many global stock markets with increased volatility.

That pattern is expected to persist as the U.S. central bank
cuts back on its cheap funding injections, China moves to
tighten up on risky lending, and emerging market weakness weighs
on recovery prospects in developed economies.

Winners so far this year, according to the HFRX index,
include Cumulus Energy fund, up 21.9 percent to Feb. 14, and
Horseman Global, which had gained 9.4 percent to Feb. 19,
according to data seen by Reuters.

But Brevan’s Emerging Markets fund fell 15 percent last year
and a further 1.6 percent in January, while its Emerging Markets
Local Fixed Income fund is down 0.2 percent.

BlueCrest’s Emerging Markets fund is down 0.2 percent so far
this year, while U.S.-based Contrarian Capital’s Emerging
Markets fund fell 6.2 percent in January but made back most of
those losses this month.

With so many political and economic troubles undermining the
road to high returns in emerging markets, chosing a successful
fund is not getting any easier.

“We think the difference between good and bad emerging
market economies is going to get more pronounced, which will
make it trickier to perform,” said Odi Lahav, CEO at Allenbridge
Investment Solutions.

(Editing by Ruth Pitchford)

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Sterling falls versus euro after bloc’s inflation surprise http://uk.reuters.com/article/2014/02/28/uk-markets-sterling-idUKBREA060NG20140228?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/laurence-fletcher/2014/02/28/sterling-falls-versus-euro-after-blocs-inflation-surprise/#comments Fri, 28 Feb 2014 17:20:53 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1178 LONDON (Reuters) – The pound fell against the euro on Friday after euro zone inflation beat forecasts, hitting investors who have been betting on a large divergence between British and euro zone interest rate paths.

The euro, which had been down against the pound in early trading, rose as high as 82.68 pence after the data, before slipping back to 82.43 pence, up 0.3 percent on the day.

Euro zone consumer prices rose 0.8 percent year-on-year this month, the same rate as in January and December and above forecasts of 0.7 percent.

The reading eases pressure on the European Central Bank to loosen monetary policy next week, and was particularly surprising after German inflation came in below forecasts on Thursday.

The pound has been buoyant since last summer, as better-than-forecast economic data has raised expectations of a British interest rate hike. Those expectations have stood in contrast to the euro zone, where low levels of price rises have raised the prospect of deflation.

Nevertheless, Morgan Stanley strategist Ian Stannard said the pound could start to do well against the euro as Britain’s more robust growth picture contrasts with the euro zone’s slower rebound.

“We need to be careful with this euro-sterling rebound. Overall the downtrend is still very much in place,” he said.

“In the relative growth picture, the UK has strong (numbers) coming through which means in the medium term a more balanced growth picture. It looks more favourable than in the euro zone, where things look a bit more challenging.”

British government bond prices gave back Thursday’s sharp gains, with 10-year yields rising by more than 4 basis points on the day to 2.72 percent.

German bond prices fell more sharply, however, as traders reacted to the inflation figures. The ten-year gilts’ yield spread over Bunds tightened by 2 basis points on the day to 109 basis points.

Hedge funds have favoured bets on sterling against the euro over bets on sterling against the dollar this year, in the expectation that the Federal Reserve’s tapering of its bond-buying will support the greenback.

While Friday’s move will be painful for funds, the trade is nevertheless still in the black this year.

Against the dollar the pound extended gains during the day, rising 0.3 percent to $1.6740, moving it back towards the four-year high of $1.6823 hit last week.

Sterling has been buoyant since the BoE earlier this month raised its forecast for 2014 economic growth to 3.4 percent from 2.8 percent and said market expectations of a rate rise in the second quarter of next year were consistent with keeping inflation close to target.

(Additional reporting by David Milliken; Editing by Toby Chopra)

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Sterling outperforms euro ahead of euro zone inflation reading http://uk.reuters.com/article/2014/02/27/uk-markets-sterling-idUKBREA060NG20140227?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/laurence-fletcher/2014/02/27/sterling-outperforms-euro-ahead-of-euro-zone-inflation-reading/#comments Thu, 27 Feb 2014 15:56:12 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1174 LONDON (Reuters) – Sterling rose against the euro for a fourth straight day on Thursday as weaker-than-forecast German inflation contrasted with Britain’s solid recovery.

But the pound made little progress against the dollar, with growing geopolitical tension driving investors into safe-haven assets and the most liquid currencies. Ukraine said on Thursday any movement by the Russian military in Crimea outside the Russian Black Sea fleet’s base in Sevastopol would be regarded as an act of aggression.

The euro was down 0.1 percent against the pound at 81.98 pence, having briefly fallen below 82 pence to its lowest since February 18 after German inflation came in below forecasts.

Investor focus will now be on euro zone inflation data for February, due at 1000 GMT on Friday, for clues as to the European Central Bank’s next move.

“What’s pushed (the euro) below 82 has been weaker German CPI. Tomorrow, if that pushes euro zone inflation lower, then we could see a knee-jerk reaction (in euro-sterling),” said Kathleen Brooks, the research director at Forex.com.

She pointed to a major support level for euro-sterling at 81.57. “If it goes below that, then we’re going back to two-year lows,” she said.

Against the dollar, sterling recovered early losses to trade marginally higher at $1.6676, with near term support seen at $1.6583 – the low struck on February 24. It had briefly jumped to above $1.6700 on Wednesday after British gross domestic product data confirmed a broad-based recovery and cemented expectations of a rate hike in the spring of 2015.

“We favour euro/sterling turning lower to 81.60/70 pence,” said Chris Turner, head of currency strategy at ING.

Sterling was the best-performing major currency of the second half of 2013 and it has extended that run this year, based on speculation that an improving economy may prompt the Bank of England to raise interest rates early in 2015.

Sterling overnight interbank money market rates indicate the chances of a rate hike have been rising in recent days, and on Thursday implied the chance of a rise in 15 months’ time.

Ben Broadbent, a member of the BoE’s Monetary Policy Committee, said on Wednesday that the strength of the pound reflected the fact that other economies, particularly elsewhere in Europe, have not grown much.

“As a consequence of firmer data the market appears to be gearing up for an eventual rate hike, with BoE members sounding more upbeat, even if it is unlikely to occur any time soon,” analysts at Credit Agricole said in a note.

“Consequently, over the near term the pound looks well supported, although eventually we expect the currency to settle back to earth. In particular, three-month interest rate differentials with the dollar appear to suggest that sterling/dollar gains are overdone.”

(Editing by Larry King)

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Aussie falls as China concerns weigh; US dollar firms http://www.reuters.com/article/2014/02/26/markets-forex-idUSL6N0LV2L620140226?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/26/aussie-falls-as-china-concerns-weigh-us-dollar-firms/#comments Wed, 26 Feb 2014 13:17:03 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1172 LONDON, Feb 26 (Reuters) – The Australian dollar fell on
Wednesday as a continuing slide in the Chinese yuan highlighted
concerns about a slowdown in Australia’s top export market,
while the U.S. dollar edged higher ahead of testimony by Federal
Reserve Chair Janet Yellen.

The Australian dollar dropped 0.4 percent to $0.8982
, heading back towards a three-and-a-half-year low of
$0.8660 hit last month.

The fall comes after a slide in the yuan in recent days,
which many commentators suspect was engineered by the People’s
Bank of China to help soften a slowdown in the Chinese economy,
with signs this week of a cooling of property prices.

“Concerns about Chinese growth (and) weaker commodities
prices certainly mean that the Australian dollar is still quite
vulnerable,” said Jane Foley, senior currency strategist at
Rabobank.

While the Aussie has been a large short bet for hedge funds
in recent years, there are signs of that tempering after the
Reserve Bank of Australia this month dropped its bias towards
easing policy.

“The market no longer appears to be dominated with one-way
bearish sentiment when it comes to the Aussie dollar. That said,
the Aussie remains very sensitive to Chinese data,” said
Rabobank’s Foley.

The euro, which a week ago hit its highest level against the
dollar since Jan. 2, was 0.1 percent lower at $1.3727.
The dollar index was marginally higher at 80.168.

Overall, trading was thin, with traders pointing to large
option expiries and hedge funds cutting back positions as
keeping major currencies in tight ranges.

Investors are looking ahead to euro zone inflation data on
Friday, ahead of next week’s European Central Bank meeting, and
Yellen’s testimony, when she is expected to be quizzed on what a
spate of soft U.S. economic data means for Fed plans to cut back
its huge bond-buying programme.

“If you look at the U.S., the data has been weak but that’s
mostly weather-related,” said Peter Kinsella, strategist with
Commerzbank in London, who said he expects little movement in
euro-dollar.

The dollar was largely able to shrug off data on Wednesday
showing lower consumer confidence and a fall in regional
manufacturing, offsetting solid gains in home prices.

Against the yen the dollar was 0.1 percent higher at 102.35
yen.

“Most of the event risk is confined to next week,” said
Stephen Gallo, FX strategist at BMO Capital Markets.

“Macro and other funds have also had a horrible month again,
so I think you have already seen a paring of risk positions into
month-end, with little if any desire to put anything new on.”

YUAN WEAKENING

The Swedish crown initially fell to a day’s low against the
euro after Riksbank policymakers said lower interest rates could
be needed.

The euro hit 8.9550 crowns per euro after the
Swedish central bank’s minutes raised the possibility of further
cuts in the repo rate if a pick-up in inflation failed to
materialise. But the crown later recovered, with the euro
trading up only marginally at 8.9295 crowns.

While the surge in volatility in the Chinese yuan has so far
had only a limited impact on developed market currencies,
investors are watching the Aussie dollar and other currencies
closely related to Chinese growth for signs of that changing.

The dollar was last at 6.1248 yuan, compared with
levels closer to 6.0600 just a week ago.

Spot yuan has entered a dramatic weakening cycle in recent
weeks, guided downward by a series of weak fixings by the
central bank, with additional momentum added to the slide by the
unwinding of yuan positions by Chinese banks.

Many market watchers see the move as a prelude to a widening
of the yuan’s trading band and believe the currency’s
longer-term uptrend remains intact, despite recent data showing
the world’s second-biggest economy is losing steam.

“Chinese macro economic risk is a factor capping the dollar
against the yen,” said Shusuke Yamada, chief Japan currency
strategist at Merrill Lynch Japan Securities.

“Macro economic risks from the U.S., China and Japan have
grown significantly. That said, such risks are unlikely to fully
materialise until key data releases in April, and the dollar is
likely to be rangebound until then,” Yamada said.

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Swedish crown falls on rate cut talk; dollar edges higher http://www.reuters.com/article/2014/02/26/us-markets-forex-idUSBREA0K0NG20140226?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/26/swedish-crown-falls-on-rate-cut-talk-dollar-edges-higher/#comments Wed, 26 Feb 2014 09:39:34 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1170 LONDON (Reuters) – The Swedish crown fell against the euro on Wednesday after Riksbank policymakers said lower interest rates could be needed, while the dollar edged higher ahead of testimony by Federal Reserve Chair Janet Yellen on Thursday.

The euro rose to a day’s high of 8.9550 crowns per euro, although still short of its two-month high of 9.0102 hit on Friday, after the Riksbank’s minutes raised the possibility of further cuts in the repo rate if a pick-up in inflation failed to materialize.

Overall, trading was thin, with traders pointing to large option expiries and hedge funds cutting back positions as keeping major currencies in tight ranges.

The euro, which a week ago hit its highest level against the dollar since January 2, was 0.1 percent lower at $1.3737. The dollar index was marginally higher at 80.153 .DXY.

Investors are looking ahead to euro zone inflation data on Friday, ahead of next week’s European Central Bank meeting, and Yellen’s testimony, when she is expected to be quizzed on what a spate of soft U.S. economic data means for Fed plans to cut back its huge bond-buying program.

“If you look at the U.S., the data has been weak but that’s mostly weather-related,” said Peter Kinsella, strategist with Commerzbank in London, who said he expects little movement in euro-dollar.

The dollar was largely able to shrug off data on Wednesday showing lower consumer confidence and a fall in regional manufacturing, offsetting solid gains in home prices.

Against the yen the dollar was 0.1 percent higher at 102.32 yen.

“Most of the event risk is confined to next week,” said Stephen Gallo, FX strategist at BMO Capital Markets.

“Macro and other funds have also had a horrible month again, so I think you have already seen a paring of risk positions into month-end, with little if any desire to put anything new on.”

The Australian dollar was 0.1 percent lower at $0.9010, with a surge in volatility in the Chinese yuan so far having only a very limited impact on developed market currencies.

The dollar was last at 6.1248, compared with levels closer to 6.0600 just a week ago.

Spot yuan has entered a dramatic weakening cycle in recent weeks, guided downward by a series of weak fixings by the central bank, with additional momentum added to the slide by the unwinding of yuan positions by Chinese banks.

Many market watchers see the move as a prelude to a widening of the yuan’s trading band and believe the currency’s longer-term uptrend remains intact, despite recent data showing the economy is losing steam.

“Chinese macro economic risk is a factor capping the dollar against the yen,” said Shusuke Yamada, chief Japan currency strategist at Merrill Lynch Japan Securities.

“Macro economic risks from the U.S., China and Japan have grown significantly. That said, such risks are unlikely to fully materialize until key data releases in April, and the dollar is likely to be range bound until then,” Yamada said.

(Additional reporting by Ian Chua in Sydney; Editing by Toby Chopra)

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Aussie down as yuan falls; Norwegian crown extends gains http://www.reuters.com/article/2014/02/25/us-markets-forex-idUSBREA0K0NG20140225?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/25/aussie-down-as-yuan-falls-norwegian-crown-extends-gains/#comments Tue, 25 Feb 2014 13:19:12 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1168 LONDON (Reuters) – The Australian dollar slipped on Tuesday as a fall in China’s yuan deepened, reflecting concern over growth and moves by the People’s Bank of China (PBOC) to prod the currency lower.

The Aussie is the nearest developed world currency to a proxy for growth in China, which takes much of Australia’s commodities output.

The Australian dollar was down 0.1 percent at $0.9025, although still some way above January’s three-and-a-half-year low of $0.8660.

Meanwhile, the Norwegian crown hit a fresh three-month high of 8.2665 crowns per euro, in largely subdued trading in major currencies.

That extended Monday’s gains after German drug firm Bayer’s $2.9 billion deal to buy Norwegian cancer drug maker Algeta. The euro was last trading 0.1 percent lower at 8.2860 crowns per euro.

“It’s hard to know what the knock-on effect of the yuan drop will be, because the market is unsure as to what’s the driver – is it the PBOC curbing speculation, increased political tensions between the U.S. and China, or something else?” said Vincent Crimmins, head of FX strategy and trading at the Bank of Ireland in Dublin.

“For now it appears to be relatively contained, but the Aussie would be the likely underperformer should it materialize into something of significance, with the dollar and the yen the likely outperformers.”

Daragh Maher, a strategist at Asia-focused HSBC, played down the prospect of a deeper sell-off of the Aussie linked to the yuan move, at least for now.

But he said players for whom the steady rise of the yuan has been one of the few certainties in global foreign exchange markets in recent years may have to reassess.

After falling another half a percent overnight, offshore rates for the yuan found some support around 6.1240 to the dollar. The spot yuan rate earlier fell below the official mid-point rate for the first time since September 2012, amid speculation the central bank may have intervened in preparation for a doubling of its trading band.

INFLATION

The euro gained 0.1 percent against the dollar at $1.3750, after the closely watched German Ifo survey beat expectations on Monday.

However, in a week lacking major economic data, all eyes will be on Friday’s first estimate of euro zone February inflation.

Recent months’ numbers have seen price growth sliding below 1 percent, strengthening the case for more action by the European Central Bank to provoke growth.

Many players who began the year believing more ECB easing and the U.S. Federal Reserve’s reining in of its own stimulus would gave the dollar a lift are reconsidering.

But few seem prepared to bet on a stronger euro ahead of the inflation number, forecast to inch down to 0.7 percent.

“We remain skewed towards a stronger euro,” Paul Robson, senior desk strategist at RBS, said.

“The Fed continues to add to its balance sheet, even if it is doing so at a slower rate, while the ECB’s is still contracting. You might get some drop off in the euro if the ECB takes more action, but if you look at the correlation of exchange rates to interest rates over the past 18 months it hasn’t been that close.”

(Additional reporting by Hideyuki Sano and Lisa Twaronite; Editing by Louise Ireland)

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Sterling gains after BoE’s McCafferty points to rate hike http://uk.reuters.com/article/2014/02/25/uk-markets-sterling-idUKBREA060NG20140225?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/laurence-fletcher/2014/02/25/sterling-gains-after-boes-mccafferty-points-to-rate-hike/#comments Tue, 25 Feb 2014 11:23:32 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1166 LONDON (Reuters) – Sterling extended gains against the dollar and the euro on Tuesday after Bank of England policymaker Ian McCafferty said market expectations of a rate hike in spring next year were “not unreasonable”.

The pound, which hit a four-year high against the dollar last week, rose as high as $1.6707 immediately after the comments, and was last up 0.2 percent at $1.6688.

The euro slipped as low as 82.28 pence from 82.374 pence beforehand.

Reiterating the central bank’s comments earlier this month that market expectations of a rate rise in the second quarter of next year were consistent with keeping inflation close to target, McCafferty said “in that sense, you’d have to say that that market curve is not unreasonable”.

There was also a warning for sterling bulls – of which there were many at the start of this year after strong gains since last summer – when he said further strength in the currency would be a worry and could delay a rate hike.

But he added that current levels for the pound were not a major problem for British exporters.

“I think the comments will provide modest support for the pound,” said Lee Hardman, strategist at Bank of Tokyo-Mitsubishi UFJ.

“I think sterling will continue to outperform the euro and the dollar this year, unless the UK economy loses a significant amount of upward momentum or inflation surprises significantly to the downside,” he said, adding that sterling can rise above $1.70 this year, while the euro could fall towards 77 pence.

Sterling has been buoyant since the Bank earlier this month raised its forecast for economic growth this year to 3.4 percent from 2.8 percent.

Sterling overnight interbank money market rates indicate the chances of a rate hike have been rising in recent days, and on Thursday indicated the chance of a rise in 15 months’ time.

With few frontline domestic economic numbers to go on this week, February euro zone inflation on Friday is seen as having the potential to nudge the European Central Bank into easing policy.

At a time when markets are weighing when the Bank will do the opposite, that would signal higher relative returns on sterling assets and could underpin the pound.

Bank of Tokyo-Mitsubishi UFJ’s Hardman said that unless there was a turnaround in euro zone economic data, the ECB was likely to lag the Bank in tightening policy. He added: “There’s nothing they (the Bank) can really do to stop the pound from strengthening further versus the euro going forward.”

(Reporting by Laurence Fletcher; Editing by John Stonestreet)

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Norwegian crown hits 3-month high, yen up after China data http://www.reuters.com/article/2014/02/24/markets-forex-idUSL6N0LT2KZ20140224?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/24/norwegian-crown-hits-3-month-high-yen-up-after-china-data/#comments Mon, 24 Feb 2014 13:40:08 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1164 LONDON, Feb 24 (Reuters) – The Norwegian crown jumped to its
highest level against the euro in three months, while the yen
was higher on Monday as investors sought safe havens after soft
China house price data.

The euro gained ground against the dollar early on after a
better-than-forecast German business survey, but later fell back
to trade lower.

It tumbled 0.8 percent to 8.2737 Norwegian crowns per euro
, its lowest level since late November.

While strategists said there was no economic data driving
the move, Erica Blomgren, chief strategist in Norway for SEB,
pointed to German drug firm Bayer’s $2.9 billion deal to buy
Norwegian cancer drug maker Algeta, announced on Monday.

The euro rose as high as $1.3772 against the dollar
after the closely watched German Ifo survey beat expectations.

But it failed to break through its seven-week high of
$1.3773 hit last week, and later fell back to trade 0.1 percent
lower at $1.3724, with ECB President Mario Draghi’s comments
over the weekend that Europe’s recovery was “still fragile”
weighing on the shared currency.

SEB’s Blomgren said she expects the euro to trade around the
$1.35 mark or around current levels, supported by investment
flows into the euro zone.

“(The economy is) looking better in the euro zone,” said
Erica Blomgren, chief strategist in Norway for SEB. “Momentum is
favouring keeping euro-dollar at high levels.”

The dollar, meanwhile, was 0.1 percent lower on the day at
102.45 yen though still well off a two-month low of
100.755 yen hit earlier this month.

The rise in home prices in China eased for the first time in
14 months in January, data showed on Monday, raising fresh
concerns over the health of an economy that has been a key
driver for global growth in recent years.

The Nikkei was down 0.2 percent overnight. The yen
and the Nikkei tend to move in opposite directions, with a rally
in the index often seen as a signal for speculators to sell the
yen and buy higher-yielding currencies, while that trade may be
unwound when risk appetite falls.

The yen’s strength this year has surprised hedge funds and
other investors alike. Many went into this year with bullish
bets on the greenback as the U.S. Federal Reserve cut back its
bond-buying while the Bank of Japan eased monetary policy
further.

“Dollar-yen moves on risk aversion, and when Tokyo stocks
are down, dollar/yen is down, even if the reason is a drop-off
in activity in its (Japan’s) major export market,” said Marshall
Gittler, head of global FX strategy at IronFX Global.

Gittler pointed to euro zone inflation data for February on
Friday as a focus for investors this week.

Group of 20 finance ministers and central bank chiefs agreed
at a weekend meeting in Sydney to set a collective gross
domestic product (GDP) growth target of 2 percent over the next
five years.

Global growth and recent turmoil in emerging markets were in
focus at the meeting, but the G20 communique did not hint at
significant friction between the advanced and emerging
economies.

The dollar index was marginally down at 80.233 after
posting its first weekly gain in three weeks last week, largely
on minutes from the Federal Reserve’s January policy meeting
showing that the U.S. central bank’s plan to reduce its monthly
asset purchases remained intact.

Market participants will be keen to see whether the Fed’s
tapering commitment offsets any weakness in U.S. economic
indicators due this week.

“What was agreed at the G20 meeting, such as setting a 2
percent global growth target, will be forgotten immediately. But
tacit approval by other G20 nations for U.S. tapering gives the
dollar some support while weighing on emerging currencies,” said
Yunosuke Ikeda, forex strategist at Nomura Securities.

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by
Ruth Pitchford)

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http://blogs.reuters.com/laurence-fletcher/2014/02/24/norwegian-crown-hits-3-month-high-yen-up-after-china-data/feed/ 0
Euro gains after upbeat Ifo, yen rises as stocks lose ground http://www.reuters.com/article/2014/02/24/us-markets-forex-idUSBREA0K0NG20140224?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/laurence-fletcher/2014/02/24/euro-gains-after-upbeat-ifo-yen-rises-as-stocks-lose-ground/#comments Mon, 24 Feb 2014 09:29:56 +0000 http://blogs.reuters.com/laurence-fletcher/?p=1162 LONDON (Reuters) – The euro rose against the dollar on Monday after a better-than-forecast German business indicator, while the yen climbed as investors sought safe havens after a fall in Asian stock markets and soft China house price data.

The euro rose as high as $1.3772 against the dollar after the closely watched German Ifo survey beat expectations, although the single currency failed to break through its seven-week high of $1.3773 hit last week.

The dollar, meanwhile, which hit a two-month low of 100.755 yen earlier this month, was 0.2 percent lower at 102.33 yen.

The Nikkei .N225 was down 0.2 percent overnight. The yen and the Nikkei tend to move in opposite directions, with a rally in the index often seen as a signal for speculators to sell the yen and buy higher-yielding currencies, while that trade may be unwound when risk appetite falls.

The yen’s strength this year has surprised hedge funds and other investors alike. Many went into this year with bullish bets on the greenback on the expectation that it would rise against the Japanese currency as the U.S. Federal Reserve cut back its bond-buying while the Bank of Japan eased monetary policy further.

“Dollar-yen moves on risk aversion, and when Tokyo stocks are down dollar-yen is down, even if the reason is a drop-off in activity in its (Japan’s) major export market,” said Marshall Gittler, head of global FX strategy at IronFX Global.

Gittler pointed to euro zone inflation data for February on Friday, as well as January inflation data later on Monday.

Group of 20 finance ministers and central bank chiefs agreed at a weekend meeting in Sydney to set a collective GDP growth target of 2 percent over the next five years.

ECB President Mario Draghi reiterated at the meeting that Europe’s recovery was “still fragile”.

Global growth and recent turmoil in emerging markets were in focus at the meeting, but the G20 communiqué did not hint at significant friction between the advanced and emerging economies.

The rise in home prices in China eased for the first time in 14 months in January, data showed on Monday, raising fresh concerns over the health of an economy that has been a key driver for global growth in recent years.

The dollar index was 0.1 percent down at 80.182 .DXY after posting its first weekly gain in three weeks last week, largely on minutes from the Federal Reserve’s January policy meeting showing that the U.S. central bank’s plan to reduce its monthly asset purchases remained intact.

Market participants will be keen to see whether the Fed’s tapering commitment offsets any weakness in U.S. economic indicators due this week.

“What was agreed at the G20 meeting, such as setting a 2 percent global growth target, will be forgotten immediately. But tacit approval by other G20 nations for U.S. tapering gives the dollar some support while weighing on emerging currencies,” said Yunosuke Ikeda, forex strategist at Nomura Securities.

(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Hugh Lawson)

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