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Exchange4free Global Forex Report (01/11/2017)

USD

Despite the Federal Open Market Committee (FOMC) meeting due later today, investors seem to be focused on President Trump’s impending Federal Reserve System (Fed) chair pick on Thursday, where it is rumoured that he is inclined towards Jerome Powell. Should the President decide to replace Yellen, she would still hold her position for two more meetings, as her term only expires in February.

At the FOMC meeting, interest rates are expected to remain unchanged, while the expectation of a hike in December remains intact.

This Friday US job reports will be released, where nonfarm payrolls are expected to come in at 312,000 and the unemployment rate is expected to remain at 4.2%.

EUR

The stance taken by the European Central Bank (ECB) on monetary policy is almost a direct contrast from what we see in the USA. Last week the ECB said it only intended to hike rates once its bond buying scheme ends, and this scheme is scheduled to only end in September 2018.

ECB President, Mario Draghi, made comments on the topic that indicate the ECB’s stance is aimed at maintaining a suitable and stable financial economy. That being said, all fundamentals such as inflation, economic growth manufacturing and services PMI point towards a stronger economy.

GBP

The Bank of England (BoE) is set to raise interest rates for the first time in 10 years, in order to keep inflation under control. This is a move that is seen by many as a risky, as it could have adverse effects on the British economy, when you throw the uncertainties of Brexit into the equation.

The BoE is expected to increase interest rates by 25 basis points, from the record low of 0.25%. If the hike takes place as expected, this will be the first hike since July 2007 for the British.

The Sterling received a further boost earlier today from the EU’s chief Brexit negotiator Michel Barnier, who has agreed to speed up the negotiations of the Brexit process.

AUD

The Australian Dollar lost some ground in earlier trading sessions following weaker than expected data released from both Australia and China (a large export market for Australia). Chinese manufacturing data and the Purchasing Managers Index (PMI) for the steel industry were the main downward drivers of the AUD. This on top of gradually weakening Iron Ore prices which is Australia’s largest export.

The AUD also lost ground against the US Dollar following positive economic data including increases in consumer confidence which reached a 17-year high.

CHF

The USD/CHF pair is stabilizing after forming a temporary top at 1.00370. The pair declined to 0.99380 and is currently trading around 0.99835.

Swiss manufacturing PMI, came in at 62.0 for October compared to last months of 61.7, and kept a lid on the pairs up move, at least for the time being.

Last month also saw the Swiss National bank recording a profit of CHF 1.5bn from negative interest it charged.

ZAR

The Rand has been struggling since Finance Minister Malusi Gigaba delivered his medium-term budget speech last week Wednesday. Gigaba did not hide the current economic situation of South Africa. He announced the country’s larger-than-expected budget deficit; the bailout of state owned enterprises and spoke on the countries slow economic growth rate, which has been revised down further. Furthermore, he failed to explain how the struggling economy plans to recover from its current state. As a result the Rand plummeted after the speech dropping to an 11 month low of 14.29 to the US Dollar and 18.89 to the British Pound.

Moody’s ratings agency warned South Africa against a further downgrade. It is expected that Moody’s and S&P will review the country’s credit ratings next month.

Evidently, the Rand has not been able to recover however, according to several analysts; the losses may only be temporary.

The unemployment rate released on Tuesday by Stats SA indicated that the rate remained at its lowest level in 14 years at 27.7% (officially).

NGN

The African Development Bank said on Tuesday that it would consider providing Nigeria an additional USD 400 million in order to assist the recovery of Africa’s largest economy.

Rate wise, the Naira remains stable against the majors in the parallel market, as it continues to trade in narrow margins. The parallel USD/NGN rate is currently at 363.

Exchange4free Global Forex Report (25/10/2017)
Exchange4free Global Forex Report (08/11/2017)

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