What’s on the horizon for Currencies, Commodities and Cash

Messages on July 20th, 2012 No Comments

What the fund managers say.

In this section we look at the House view of one of the leading Fund Managers operating in Ireland and importantly, what’s their current position and view on global currency and commodities markets.

Foreign Exchange – Very Heavy US Dollar, Neutral Sterling, Light Yen and Euro

The euro and yen remain relatively expensive and a headwind to economic recovery. Sterling’s value will not be crystallised while the debate about QE continues. The US dollar is relatively cheap and benefits from safe haven flows.

Global Commodities – NEUTRAL

Strong demand for commodities, led by consumer trends and infrastructure projects in emerging economies, but higher prices have encouraged new supply while dollar appreciation affects investment flows.

Cash – LIGHT

Central banks in more economies are reacting to the slowdown in global economic growth by easing monetary policy.

Key Issues

We remain positive on the ability of companies to generate profits, despite the muted or poor economic backdrop seen in many developed economies, as emerging economies continue to expand strongly. However, the rise in raw material costs has squeezed margins for some companies, while currency appreciation is becoming more of a problem for others.

As policymakers become much more mindful of the ongoing sovereign debt crisis, this suggests that more central banks in the OECD will accept some form of quantitative easing into 2012 and 2013. Meanwhile, other central banks, especially those in Asia and Latin America, are beginning to loosen monetary policy in the face of weaker inflation pressures. Energy costs are falling too, e.g. Brent oil close to $90 per barrel, which, if sustained, will begin to provide support to consumer incomes and corporate margins into the autumn.

This outlook of potential investment market developments in 2012 (and beyond)  does not constitute an offer and should not be taken as a recommendation. This is  only the view and outlook of one of the Fund Managers operating in Ireland.

Contact Your Local Independent Financial Adviser

Lucas Financial Consulting Ltd is based in Carrickmacross Co Monaghan. As we straddle four counties – Louth, Monaghan, Cavan and Meath we are ideally placed to become your new Local Independent Financial Adviser.

Warning: The value of your investment may go down as well as up
Warning: Past performance is not a reliable guide to future performance
Warning: Funds may be affected by changes in currency exchange rates

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