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Exchange4free Global Forex Report (08/11/2017)

USD

The Dollar recovered well in early trading sessions against most of its major peers including the Euro and Sterling after dipping slightly lower on Monday.

This morning the Greenback was trading just above 1.16 (EUR/USD) and 1.3140 (GBP/USD). Positive economic data throughout the year has contributed to the overall strength of the Dollar. 
Last week’s non-farm payroll data came in below expectations at 261,000 vs the expectation of 310,000, however this still shows a positive economic trend overall for the year.

President Trump continues his tour through Asia with largely successfully meetings in Japan and South Korea thus far. With the next stop being China, the goal remains to improve trade relations between the two nations.

EUR

The Euro was trending weaker in yesterday’s trading session following worse than expected German industrial production data, which fell by twice as much as what analysts expected. The figure fell by 1.6 percent in September where a 0.8 percent decline was expected.

On a positive note, retail sales in the region continued to remain strong with sales up 0.7 percent for the region for September 2017.

German Chancellor, Angela Merkel, continues this week with talks relating to the coalition government that she requires in order to continue her 12 year long run in power.

GBP

The Pound Sterling was hit by an all-round stronger USD, while a holding pattern against the Euro is emerging as markets bide their time ahead of the next round of BREXIT negotiations. Euro purchasers are setting 1.15 as a resistance point on GBP/EUR.

The prospect of a deal between EU and UK to settle the Brexit bill is crucial towards moving to the next phase of Brexit talks on transition and trade. Everyone is expecting a few more rate hikes over the next three years. The last interest rate hike did not go down well as some seeing it as a knee-jerk-reaction with no basis to the problems with inflation. It is a coin flip as to whether this interest hike will have the desired impact.

AUD

Global commodity prices are on the up, but iron ore isn’t, and this will weigh in the Australian Dollar.

The AUD remains under pressure against the USD even though commodities are booming again. Unfortunately for the AUD Iron ore (one of its largest exports) is not, despite showing a brief glimmer of hope towards the end of last week.

On Friday we could see a big day for the AUD, giving light to the state of the Australian economy, and decision making at the RBA (Reserve Bank of Australia). On Friday we see the release of the Quarterly Monetary Policy report, the expected data coming out is disappointing, which is putting pressure on the Aussie.

CHF

Swiss consumer price inflation released on Monday by the Federal Statistical Office (FSO) remained at 0.7% year-on-year in October 2017, an increase of 0.1% from last month.

The USD/CHF pair has been lacking direction and has remained just below parity. With no major economic releases for the Swiss Franc today, movements will be owed to macroeconomic factors.

Last but not least, the Swiss National Bank realised a record high profit of CHF 32.5 billion between July and September when their foreign currency reserves increased by CHF 17 billion in October.

ZAR

Recent volatility in the Rand has been proportional to the risks of other currencies. Unlike the past 2 weeks’ extreme volatility, which was owed to Finance Minister Malusi Gigaba’s Medium Term budget speech.

The Rand opened at 14.09 to the US Dollar on Tuesday and by midday it had fallen to 14.22; dropping almost 1%, owed to a strengthening Dollar, which was in line with other emerging markets. The Rand also dropped around 0.58% against GBP and 0.38% against the Euro.

Rumours are growing that President Jacob Zuma will announce free higher in the near future with a plan that could cost the nation approximately 40bn. More details are expected to emerge in the coming weeks.

NGN

Africa’s largest economy has only just emerged from its first recession in 25 years, and plans to push growth in the shaky economy are already underway.

Yesterday President Buhari presented a USD 28.16 billion budget for 2018, this is equivalent to a staggering 8.6 trillion Naira, a 15% jump from the 2017 budget. The budget is still awaiting approval from parliament.

Coincidentally, Nigeria’s credit rating was downgraded to B1 by Moody’s last night, citing that Nigeria’s efforts to decrease its dependence on oil revenues has been largely unsuccessful. Moody’s believes that the government needs to expand their revenue base.

The downgrade had very little effect on the USD/NGN rate (both in the official and parallel markets) as the announcement also coincided with the Central Bank of Nigeria’s injection of USD 195 million into the inter-bank foreign exchange market.

Exchange4free Global Forex Report (01/11/2017)
Global Forex Report (15/11/2017)

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