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Exchange4free Global Forex Report (07/03/2018)

USD

The US Dollar weakened against most major currencies on Tuesday amid ongoing tariff debates in the country. Last week, President Donald Trump announced a plan to impose hefty tariffs on steel and aluminium imports. The announcement has raised concerns and has caused the US Dollar to depreciate. Many speculators are concerned that a trade war could further hurt the US economy.

Chief economic adviser to the US President, Gary Cohn, has resigned, the resignation came after losing a heated battle with the white house on the tariff hikes. The news about Cohn’s resignation, has caused further uncertainty amongst investors, as the USD remains under pressure, as markets considered the possible implications.

EUR

The EUR/USD pair has been climbing since Monday, despite political uncertainty in the Eurozone. The Euro remained appealing to investors and market participants even with the uncertainty surrounding the results of Italy’s 2018 general elections over the weekend. During Tuesday’s session the EUR/USD pair was trading around 1.24, up from around 1.23 on Friday.

Analysts and speculators alike believe that the strength in the Euro is due to the market optimism surrounding Angela Merkel’s grand coalition and the overall strength in the European economy. Another reason for the climb in the EUR, is the weakness of the US Dollar on Tuesday. The Euro could find further support, as the European Central Bank meet on Thursday to discuss monetary policy and a possible tightening thereof. Currently the EUR/USD pair is trading around 1.2420.

GBP

The Sterling had strengthened against the Euro during Monday’s session, supported by strong performance in the UK service sector and the current political turmoil in the Eurozone following Italy’s general election. The pair was trading around 1.1252 during Monday’s session.

The service sector data surged past the forecasted score of 53, and reached a score of 54.5. The score was predominantly caused by a rebound in business activity growth during February. The recent PMI survey has shown that the UK economy has been growing steadily at a rate of 0.4% in the first quarter. The PMI data and the service sector data, could lead to lower consumer prices and alleviate the pressure on the Bank of England to hike interest rates in the near future. Currently the GBP/EUR pair is trading around 1.11859.

AUD

The Australian Dollar fell to a low of 0.7727 during Monday’s session, following the release of mixed Australian economic data and the on-going fears of escalating trade wars between the US and other major nations.The Australian Dollar recovered, rallying back to 0.778 on Tuesday, finding support from a return of investor risk appetite in the North American session.

Economist David de Garis from the National Australian Bank, commented that the equity markets are back in the black, as Treasury yields are higher, as the focus shifts to President Donald Trump’s tariffs. The political restlessness in the US and a strong rebound in crude prices, have led to the bounce back of the Australian Dollar. Currently the AUD/USD pair is trading around 0.7802, up 0.66% from last week.

CHF

The USD/CHF pair remained stable and quiet during Tuesday’s session. The pair was hovering slightly below 0.9400 and peaked at 0.9416. The Swiss Franc was among the worst performers amid risk appetite, whereas the Yen was one of the top performers for safe haven currencies.

There are no major events in the region, and investors sentiment will be determined by global macro-economic events. Investors and market participants will be keeping a close eye on the US with regards to President Donald Trump’s escalating trade war. Currently the USD/CHF pair is trading around 0.93929.

ZAR

According to Reuters, the South African Rand is expected to drop over 4% within the coming year. This is owed to investors reaping in their returns from the overvalued currency. There has been an overall uncertainty regarding the difference the new President Cyril Ramaphosa can make in reforms. The expectation is for the rand to be trading at around 12.25 against the US dollar in a year’s time.

Gross Domestic Product (GDP) growth released yesterday by Stats SA grew more than expected in the fourth quarter of 2017 reaching 3.1%. This growth was largely owed to the recovery in agriculture and trade. It exceeded the National Treasury’s expectation of 1% which was announced in the National Budget Speech last year February. As a result, the rand strengthened by 0.5% against the US dollar and was trading around 11.71 yesterday. It has since stabilised to trading at around 11.83.

NGN

During Tuesday’s session the indicative exchange rate of the USD/NGN remained unchanged at 360.1. The Naira also remained stable at 362 against the USD in the parallel market.

In other economic news, Nigeria’s trade account turns positive after the recession. The rise in oil exports outweighed imports. The rise in the trade account boosts Nigeria’s ambition to promote exports to support the fragile economy and foreign exchange. Nigeria’s gross domestic product rose to 0.8% to emerge from their first recession in 25 years.

Exchange4free Global Forex Report (28/02/2018)
Exchange4free Global Forex Report (14/03/2018)

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