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Exchange4free Global Forex Report (01/06/2017)

USD

The USD is weakening against most of the G10 non-commodity based currencies, with EUR up 0.5%.

FED president, John Williams, said that he sees a total of three interest rate increases for this year as his baseline scenario; but views four hikes as a possibility if the US economy gets an unexpected boost.

Most analysts expect a rate hike this month. This would get the USD to pull back from its recent losses.

EUR

Yesterday we saw the EUR break sharply against the US Dollar early in the session. This was in reaction to a story that suggested Greece might default on its next debt payment. Dovish comments from the European Central Bank President Mario Draghi, were another contributor. However, the single currency recovered into the close to finish higher.

According to preliminary estimates, inflation in the Euro area grew below expectations.

GBP

The GBP traders have had an eventful morning with two UK General Election polls highlighting divergent voting intensions ahead of 8 June.

The GBP weakened early in the day, hitting a near six-week low, before shrugging off most of the losses as the Panelbase poll hit the wires.

The initial weakening in the GBP came after pollsters, YouGov, said the ruling conservative party may win just 310 seats (16 seats short of majority) leading to a hung parliament. This in turn, lead to a near six-week low for the Sterling. A hung parliament would make tricky Brexit negotiations harder still, with coalition parties expected to differ on a wide range of diverse topics. This would make a unified UK negotiating position difficult.

AUD

The Australian Dollar softened overnight, losing ground both on the US Dollar and the crosses. The fall in oil prices has seen most of the commodity-linked currencies underperform against the US Dollar, with the Australian Dollar emerging as the worst performer.

The AUD under performance was compounded by the declines in iron ore and coal prices.


 CHF

Switzerland’s central bank has slashed rates into the negative territory; this in a bid to weaken its currency to stop growth and inflation.

Earlier this week, SNB Chief Thomas Jordan said that the Franc, which is down 2 percent against the euro this year, still remained over-valued.

The overvaluation of the Swiss Franc hampers business investment while subdued job creation keeps wages in check.

ZAR

The Rand lost some ground over the weekend due to political disappointment, as some expected president Zuma to step down after the NEC meeting.

The Rand did pull back some ground yesterday, however there are other pressures that are on the horizon. One of these major pressures is the Barclays sell-down, which is Rand negative. The sale will generate an outflow of around R25 billion.

The Rand has been lucky lately, as losses on risk currencies would have been far worse if it was not for the renewed sharp Dollar losses and Pound weakness.

NGN

The Naira appreciated further against the Dollar in the parallel market to 375 NGN on the 26 May from 381 NGN on the 19 May.

This comes thanks to the Central Bank of Nigeria (CBN) injecting $205 million Dollars into various segments of the foreign exchange market. It will be interesting to see how long the CBN can keep making these injections and what will happen to the Naira when it comes to an end.

Exchange4free Global Forex Report (24/05/2017)
Exchange4free Global Forex Report (07/06/2017)

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