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Exchange4free Global Forex Report (10/01/2018)

USD

The US Federal Reserve (FED), announced last week that they are likely to hike interest rates 3 times in 2018.

Despite the planned hikes for 2018 the Dollar still lost ground as investors are of the opinion that inflation is likely to remain low throughout the period.

President Donald Trump’s attempt to repeal the Deferred Action for Childhood Arrivals (DACA) “dreamers” bill was denied by court judges which stabilized the US economy.

This week’s news has also been alive with talks of Trump’s tax reform bill. This should have a positive effect on the economy in the short term as more industries are expected to bring more business back to the US making use of the reduced tax.

EUR

Compared to the USD the Euro has been struggling to keep up. This was due to the stronger equity and bond markets in the United States over the past few weeks.

Although the Euro has seen a slight recovery since Tuesday, forecasters believe that this recovery will be short lived due to the current nature of the US economy.

GBP

The Pound to the USD fell 0.32 percent on Tuesday. This was largely due to Prime Minister Theresa May’s cabinet reshuffle, with particular interest being placed on the balance between Pro-Brexit ministers and Anti-Brexit Ministers within the cabinet.

The British Pound is expected to be more stable in comparison to the previous 2 years as market data suggests. This would be positive news for those holding foreign currency exposure, however, not so much for the speculators.

AUD

The Australian Dollar has reversed some of its recent gains against the USD, coming down from a 1 week high of 0.78741 to 0.78101, before moving back to trading around 0.7855 (at the time of writing).

With the AUD failing to break the key resistance level of 0.7896 (the October 2017 high), analysts are expecting a retracement on the AUD/USD towards the 200 day moving average of 0.7705 before finding support.

Should the AUD manage to break the resistance of 0.7896, we could see the AUD/USD pair hit as high as 0.80. The markets seem to agree that the recent gains for the AUD against the USD, had very little to do with AUD strength, but rather to do with USD weakness.

In a one month view the AUD finished as the second best performing G10 currency, however, according to a senior FX Strategist Jane Foley, this outcome is the result of a surge in expectations of a hike from Reserve bank of Australia (RBA), as well as a recovery in the price of Australia’s key exports of coal and iron ore.

CHF

The Swiss National Bank announced that it had realised profits of 54 billion Swiss Francs in 2017. The profits arose on the back of higher global equity and bond prices as well as a depreciating Swiss Franc. Of the 54 billion profit realised, 49 billion was from Euro denominated asset holdings which realised a profit once converted back to Swiss Francs.

The Franc depreciated approximately 10% in 2017 and remains on a downward trend. Further depreciation of the currency should be beneficial for Swiss exports in the coming months.

ZAR

The Rand remained relatively strong in yesterday’s trade as other emerging market currencies weakened.

Rumours about President Jacob Zuma’s step down caused a strengthening in the Rand as traders hoped that the rumours were true. However, the rumours were unfounded and the Rand lost some ground in early trade on Wednesday morning.

The 1% gain seen on the back of these rumours is evident of how the market could react should he step down earlier than expected. 
The ANC NEC will meet this week for the first time since their electoral conference in December 2017. The purpose of this will be to table and discuss Zuma’s remaining term in office.

The market also eagerly awaits the release of the NEC policy document to provide insight on how South Africa plans to achieve sustainable growth and how issues of inequality and poverty will be addressed.

NGN

The central bank of Nigeria introduced a new spread limit on Monday in order to boost liquidity in the foreign exchange market, which has been marred by a gap between the stronger official Dollar rate and a weaker black market rate. The central bank has attempted close this gap by injecting USD into the market.

Monday saw an injection of $190 million USD, which was spread across small and medium business sector, a wholesale sector and the tourism sector. Traders can now buy the hard currency USD without prior approval from the central bank.

The new agency of Nigeria reports that trading at the investors window saw the Naira close at NGN 359.38 to the USD. Traders in the market said they expected the Naira to appreciate further in the weeks ahead.

We saw the Naira trading at 361.5 NGN to the USD at the parallel market on Tuesday while the GBP and Euro sold at NGN 475 and NGN 420 respectively.

Exchange4free Global Forex Report (03/01/2018)
Exchange4free Global Forex Report (17/01/2018)

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