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Exchange4free Global Forex Report (1/08/2018)

USD

The US Dollar has been in low demand during Tuesday’s session and was making losses against most of its peers. Analysts say that the losses of the US Dollar was mainly caused by Monday’s disappointing manufacturing data out of the US.

The Federal Reserve reported that manufacturing data slowed in July, dropping from 36.5 points to 32.3. Traders have seen this drop as bad news, even though the result beat the forecasted decline to 31 points. The US Dollar has been limited by the trader uncertainty surrounding the Fed’s interest rate decision later today. Market speculators believe that the Fed will most likely leave interest rates unchanged, but this meeting will give a good indication as to when the next rate hike will take place.

Later this afternoon, US personal income and spending statistics for June will be released, which are predicted to show spending growth levels increase from 0.2% to 0.4%.

Traders and market speculators alike will keep a close eye on trade tensions between the US and China, as the Trump administration is aiming to increase tariffs on Chinese imported goods even more. Increased tariffs might not have such a positive effect on the Dollar. Currently the EUR/USD is trading around 1.1679, down almost 0.5% from Tuesday.

EUR

During Tuesday’s session the euro posted some gains against the US Dollar and was left trading around 1.1738. Analysts say that this is resilient trading, especially in the face of the latest Eurozone data, which has shown faster pace inflation but slowing GDP growth. The Euro’s advances against the US Dollar suggest that traders are optimistic, focussing more on inflation data rather than the lower GDP figures.

The annual inflation for the month of July rose from 2% to 2.1%, which is above the estimated target of the European Central Bank (ECB). Speculators believe that this rising inflation could raise the odds of an earlier interest rate hike. Looking to the day ahead, traders will be keeping an eye on European PMI data, especially German manufacturing data, which is expected to rise. Manufacturing is a key component of German economic growth, therefore a rise here could be enough to boost optimism among Euro traders. Currently the EUR/USD currency pair is trading around 1.1679.

GBP

The Sterling has held close to its opening levels against the US Dollar during Tuesday’s session. The pair was left trading around 1.313 in the wake of some disappointing consumer confidence news. Analysts believe that the Sterlings movements during Tuesday’s session, was also caused by trader uncertainty surrounding the Bank of England’s interest rate decision on Thursday.

The latest UK economic data has not supported the Sterling, as the UK consumer confidence data fell short of expectations. The figures declined from 9 points in June, to 10 points in July, indicating greater pessimism under consumers. According to analysts the overall index score has now registered at zero or negative since February 2016. The long slump in the UK was mainly due to concerns about personal financial situations, the general economic outlook and ongoing Brexit negotiations. Speculators and analysts alike say that it is difficult to forecast what news will have a positive impact on the Sterling in the short and medium run. Currently the GBP/USD currency pair is trading around 1.3111, down 0.14% from Tuesday.

AUD

The Australian Dollar rose across the board on Tuesday, finding support from mixed Australian economic data, renewed optimism towards trade negotiations between the US and China as well as a few signs the Bank of Japan will dial down its ultra-loose monetary policy. The AUD/USD currency pair was seen trading around 0.7427, up almost 0.31% on the day.

The Australian dollar’s gains mostly occurred during the Asian session, supported by a strong Australian building approvals report for June, an improvement in investors risk appetite after the policy announcement by the Bank of Japan and the deterioration in New Zealand business confidence.

Looking to the session ahead, it will be another busy session for traders as the start of a new month leads to more economic data releases around the globe. In Australia, markets will receive manufacturing PMI data for July later today, along with monthly Home Value Index. The Bank of Australia will release its monthly commodity price index, which can have an impact on the Australian dollar. Currently the AUD/USD currency pair is trading around 0.7396.

CHF

On Monday, we saw the Swiss Franc strengthen by 0.61% against the dollar hitting as low as 0.9880. We have since seen the Franc gaining ground again from 3 week lows and is currently trading around 0.9920 against the USD at the time of writing. We expect 0.99 to act as a new resistance level.

Last Wednesday, ZEW Swiss economic expectations index came in at -4 for June. This was a steep drop in comparison to May’s reading of 8.


ZAR

On Tuesday evening South-African President Cyril Ramaphosa made an announcement that the government will amend the constitution in order for land expropriation without compensation to work properly. The South-African Rand did not respond well to this announcement, and fell from R13.10 to R13.26 against the US Dollar.

The weakening of the Rand came at a stage where the Rand wa staging some sort of comeback against the US Dollar, as the Rand posted gains against the US Dollar during Monday’s session.

The Rand’s losses are also due to slowing growth in Chinese manufacturing due to rising fears surrounding trade disputes between the US and China. China is a major source of foreign earnings for commodity exporters such as South Africa and with rising fears surrounding trade disputes, exports have decreased which have caused the Rand to depreciate. Looking ahead, investors and traders will be keeping an eye on US rate decisions and ECB meetings over monetary policy later this week. Currently the USD/ZAR currency pair is trading around 13.2729.

NGN

By the end of this year, Nigeria’s Debt Management Office (DMO) have planned to form a green bond program that will be raising funds to support environmental projects. According to Ibrahim Jibril, a junior minister for the environment, the program is forecasted to be worth around NGN 208 billion by the end of 2018.

Nigerian President Muhammadu Buhari was elected as the chairman of ECOWAS (Economic Community of West African States) on Tuesday.

On Monday the Naira weakened slightly against the US dollar at the parallel market closing at N358.30. The naira remained constant against the British Pound at N480.

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