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Exchange4free Global Forex Report (03/01/2018)

USD

On Tuesday the Dollar fell to new three-month lows. Investors aimed to reap the rewards in emerging market economies following rising commodity prices.

As more central banks around the world return to policy normalisation with some hiking interest rates, the Dollar’s appeal seems to be losing ground.

Positive manufacturing data in the European and Japanese economies throughout 2018 as well as continued tapering of the quantitative easing programme by the European Central Bank (ECB) could further negatively impact the USD.

Market commentators have also made remarks regarding the slower than expected implementation of legislative reforms by President Trump.

EUR

The Euro lost some ground earlier today to trade around 1.2035 (EUR/USD), following continued strength from 2017. Better than expected manufacturing and other economic data have been large contributors to much of the gains seen throughout 2017. Market commentators are of the opinion that this will continue through to 2018.

Investors are also fairly optimistic about the Euro following comments from ECB board member, Benoit Coeure, earlier in the week. Coeure stated that there is a reasonable chance that the ECB would not extend bond purchases beyond September 2018.

GBP

The Sterling has enjoyed a jump above 1.36 against the USD today after gaining momentum on the back of a report that the UK could be joining the Trans-Pacific Partnership.

At the time of writing, the Pound has retraced some of the gains and is now trading around 1.3585.

Short term bullish tone is expected to remain as long as the price hold above 1.3550. A significant break above 1.36 could see 1.3650 levels tested. Against the Euro, movements have largely been sideways.

UK PMI (Purchasing Managers Index) data released yesterday showed that the UK economy started 2018 in solid footing. Although the reading of 56.30 came in below expectations of 58, the data confirms that impressive growth remains in place, and therefore markets expect any Sterling weakness forthcoming to be limited in nature.

AUD

The Australian Dollar continues to rally, primarily against the Dollar, with the AUD/USD exchange rate hitting a high of 0.7844, before retreating. The rally here is largely seen as USD weakness rather than AUD strength.

The next major piece of Australian economic data released will be due on Friday - where trade balance figures for November will be revealed.

CHF

The Swiss Franc is losing ground against the Pound with the GBP/CHF expected to continue towards the forecast price of 1.3252. Currently the market is trading around 1.3225.

The USD/CHF seems to have stalled its bearish slide at the 0.97 handle and has managed to rebound around 15-20 pips from 3 month lows. If 0.975 level is broken, the next resistance is 0.9811.

ZAR

The Rand remained quite stable entering the first trading day of 2018. The currency saw huge advances at the end of last year; most of these gains arising from when Cyril Ramaphosa was elected as President after Jacob Zuma.

Technical indicators suggest that the Rand has been overbought since the election. Over the past 3 months, the Rand has proved to be one of the top performing currencies among emerging markets.

During the month of December, the Rand strengthened by 10.4% against the US Dollar, about 10% against the British Pound and lastly 8.9% against the Euro.

After ending the year on such a positive note, all attention will be on the National Budget speech which will take place in February. Perhaps this will force the Rand to find its true value.

NGN

The Naira closed at 363 per USD at the parallel market on Tuesday, the same rate it closed before New Year on Friday. For the majority of the December we saw the Naira around the 365 mark and then gaining some strength into 2018.

Global oil prices continue to rise in the interim, which should benefit the Nigerian Economy in coming months with their economy largely reliant on oil exports. However, the Nigerian government will need to seek out other sources of economic growth to avoid a recession in 2018.

The Central Bank of Nigeria has still been injecting Dollars into the forex market on a weekly basis over the past few months. Markets will have an eye on the Naira to see how long the CBN will keep injecting USD into the forex market.

Exchange4free Global Forex Report (13/12/2017)
Exchange4free Global Forex Report (10/01/2018)

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