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Exchange4free Global Forex Report (11/10/2017)

USD

The USD initially had a positive reaction against a basket of currencies following President Donald Trump's tax reform plans. One key change in the proposal includes a cut in the corporate tax rate - coming down from 35% to 20% (initially the president's target was 15% however, reports claim that the target was always 20%, and the 15% was used as a negotiation tactic).

The USD strength was not sustained as uncertainty creeped in, following President Trump's war of words with Senator Bob Corker, which raised concerns that the push for the overhaul on the tax code could stall. Other key factors involving the loss of upward momentum for the USD includes rising tensions between the USA and their NATO allies Turkey, as well as the looming threat of of a war with North Korea.

EUR

The Spanish Prime Minister, Mariano Rajoy had to chair an emergency cabinet meeting today regarding the independence of Catalonia. Rajoy has stated that he will do everything he can to prevent this from occurring and the declaration for independence has been suspended. As a result we expect to see Spanish stocks surging. Had they managed to break away, there would have been severe unknown results for the Euro.

Catalan President, Carles Puigdemont, took the Euro to a 2 week high on Tuesday by suspending the move to become independent and allow for negotiations with the Spanish Government.

GBP

British Prime Minister, Theresa May, delivered her speech on Monday where she commented on Brexit. She expressed that they do not want to accept the current economic model with EU post-Brexit but would rather explore a new, unique and creative economic partnership. There has also been talk regarding the Pound falling if the European Council meeting (taking place on 19 October) delays the UK from entering trade negotiations.

Interestingly, Theresa May refused to answer the question of whether she would vote for Brexit now.

The British Retail Consortium (BRC) increased to 1.9% in September from 1.3%,this came in better than expected. The UK industrial figures also impressed the markets. Despite the Pounds recent weakness, the general sentiment towards the currency has been positive.

AUD

The Australian Dollar was sending mixed signals on Tuesday where it strengthened against the US Dollar but lost ground against the Pound and the Euro.

The rise against the Greenback is partly owed to the positive Australian business confidence report for September, which was revealed on Tuesday and also partly owed to the concerns regarding the ability of President Donald Trump to deliver his US tax reform.

The fall against the Euro and the Pound was a result of these two currencies strengthening due to positive economic data being released and not necessarily a result of the Australian Dollar weakening.

CHF

The Swiss unemployment rate fell marginally in September to 3.1% from 3.2% which was released on Tuesday. Markets were expecting the rate to remain unchanged. This had little effect on the USD/CHF cross, as the pair remained trading within a narrow range below 0.98. The USD/CHF pair is expected to find support at 0.9733 and resistance at 0.9788.

ZAR

The Rand dropped against the US Dollar to 13.8650, hitting its lowest on Monday since April 11. All emerging markets took a hit when President Donald Trump announced his tax reform proposal. The effect on the Rand was greater than other emerging markets. According to Andre Botha, a dealer at TreasuryOne, the effect on the Rand could be more exaggerated because of the easy access to the market.

The manufacturing production data released on Tuesday exceeded the expectation by increasing by 1.5% in August as opposed to the expectation of a drop of 0.5%. Mining data will be released on Thursday this week.

NGN

President Muhammadu Buhari is seeking approval from lawmakers in the upper chamber of parliament for $5.5 billion of foreign borrowing. This as Africa's biggest economy grew in the second quarter, climbing out of its first recession in 25 years on the back of an increase in oil revenues. However, the pace of growth was slow nonetheless, suggesting the recovery remains fragile.

The USD/NGN is currently trading at 305.80 at official market rates.

Exchange4free Global Forex Report (13/09/2017)
Exchange4free Global Forex Report (18/10/2017)

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