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Exchange4free Global Forex Report (07/02/2018)


The US Dollar started the week on a positive note after global stock markets posted sharp losses on Monday. On Tuesday the EUR/USD pair was trading at 1.2407, up 0.32% on the day. The gains in the US Dollar was due to JOLTS Job Openings in the U.S, which are expected to reach 5.95 million; along with the Dow Jones posting its biggest one day loss of 1500 points.

Analysts have warned against the slow rate of inflation in the U.S economy. Should inflation policies change, it could have serious ramifications for the Federal Reserve Bank’s policy and the value of the U.S Dollar. Low wage inflation implies soft growth in consumer demand, which could prevent the Fed from hiking interest rates.

Speculators and analysts advise that a sharp rise in the U.S Dollar value, could indicate a second wave of market risk and could have some repercussions on the Dollar and the U.S economy. Currently the pair is trading around 1.24 compared to 1.237 on Monday.


During Tuesday’s session the Euro posted gains after starting the week with losses. The EUR/USD pair was trading at 1.2407 at the end of Tuesday’s session, up 0.32% from the previous day. Speculators believe that the gains in the pair is the result of European data releases.

German Factory Orders impressed with a gain of 3.8%, exceeding market expectations of 0.6%. Speculators and analysts are awaiting German Industrial Production data, which will be released later today. It is expected that this Industrial Production release, could further strengthen the Euro. Currently the pair is trading around 1.24.


The Sterling has faced a difficult week after losing almost 3 percent against the dollar since 25 January 2018. The decline comes following a slightly stronger dollar as well as other factors including weaker than expected data from the UK services sector and only modest growth in retail spending. In addition, UK Brexit negotiators face increased tensions amidst their exit from the European Union.

Financial firm IHS Markit, has stated that economic growth for the first quarter is likely to slow to 0.3% for the first quarter of 2018, down from 0.5% seen in the last quarter of 2017.

Later this week the Bank of England (BOE) will release its inflation report which may give some insight regarding possible interest rate hikes in 2018.


On Tuesday, the Australian Dollar reached a fresh 3 week low against the US Dollar, trading at 0.7863 on the day. The AUD/USD pair could remain flat-lined for the weeks to come.

The Reserve Bank of Australia’s first interest rate decision of 2018, may be the cause for the drop in the Australian Dollar and expected flat line in the AUD/USD pair. The RBA’s “wait-and-see” approach to monetary policy causes investors and speculators to take a cautious position in the market and leaves the AUD/USD pair  volatile. Currently the pair is trading around 0.787, up 0.09% from Tuesday’s 0.7863.


The Swiss Franc finds itself on the back foot against its fellow major peers, as it fails to benefit significantly from risk aversion .The USD/CHF pair finds itself trading between 0.93 and 0.94. If the upward momentum seen yesterday is regained and the current consolidation is broken, the next USD/CHF level to watch is 0.94, a break beyond this could see the next target at 0.9425, followed by 0.9450.

As far as the Swiss economic calendar goes, the next major event takes place on Friday, as the unemployment figures will be released. The forecast is for the unemployment rate for January is 3.4 %, up from the current 3.3%.


The South-African Rand is continuing its positive streak as it reaches its best levels against the U.S Dollar since May 2015. The appreciation of the Rand can be attributed to the recent developments surrounding Eskom and the re-election of a new chair in the company.

Upcoming events that can have a significant impact on the value of the Rand, include the Budget speech on the 21st of February and the State of the Nation address, for  which a new date is still to be announced. The budget speech is crucial, for Moody’s will be watching closely before releasing their new review on the country’s sovereign credit rating on the 23rd of March.

Analyst believe that the stronger Rand is not necessarily the best for the country’s economy as South-Africa is largely reliant on exports, and a stronger Rand could have a significant impact export growth.

Furthermore, speculators are cautious with the upcoming events in South-Africa and it is expected that the Rand will loose ground against all major currencies after the Budget speech and SONA. Currently the USD/ZAR pair is trading around 11.9160, compared to 12.0476 on Monday.


The Naira is expected to depreciate against the US dollar at the official window to 386 from the current average of 360. There is an expected 7% depreciation in the exchange rate, as foreign exchange demand increases and foreign investment slows ahead of the 2019 elections.

We also expect that the Central Bank of Nigeria (CBN) will maintain the exchange rate peg of 305 to the USD, this comes about from the outlook of the oil price and increased reserves (USD 40.6bn).

Analysts expect exports to outpace imports on strong oil export revenues and shrinking import demand this year. This comes after reports that the US crude inventories fell last week and the Oil prices rose yesterday.

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