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Exchange4free Global Forex Report (13/09/2017)

USD

The weak USD is benefitting almost every other currency. The weaker USD price looks to be igniting some real positives in the global economy. Growth is up as businesses seem to be shaking off some of the deflationary mind-set that has plagued them for some time.

Investors in the US were concerned over the weekend with the possibility that North Korea was going to conduct another nuclear test to celebrate the anniversary of their nation’s founding. The other concern was Hurricane Irma making landfall in Florida. With all the predictions anticipating a storm with the power to do as much damage as Katrina, this did not happen as it was downgraded to a category 2 storm.

Things to watch out for: US PPI is due today- the US economy is chugging along pretty well except for the stubbornly weak inflation, which is hurting the USD. The PPI is expected to improve to 0.3% on Tuesday. On Thursday we have CPI data coming out of the US.

EUR

The EUR/GBP exchange rate has continued to fall in the wake of the passing of the EU repeal bill and the UK’s inflation rate smashing expectations.

The Euro dropped to an intraday low of 1.1926 on Tuesday against the USD before rising to a high of 1.1993 in Asia.

Tomorrow we see the releases of Eurozone quarterly employment and German CPI numbers. These reports are not expected to move the market much, so the Euro should continue to take its cue from yields and the markets appetite for USD.

The Eurozone policy remains up in the air after yesterday’s warning from the European Central Bank’s (ECB) Benoit Coeure who stated: “the economy may continue to need high levels of stimulus in the long term.”

GBP

A surprise rise in UK inflation put a Bank of England (BoE) hike back on the cards, while the USD bounce continued. The GBP was the top performer. The Pound showed what a sliver of inflation can do after CPI rose 3.9% year on year, compared to 3.7% expected on Tuesday.

The GBP/EUR exchange rate is trading 0.6% higher at 1.107 after the odds of an interest rate hike in the near-term from the BoE were greatly increased by the latest CPI reading.

While the BoE is expected to hold interest rates steady in the September 14th meeting, todays latest leap in inflation could be taken by various members of the Monetary Policy Committee as an indication that the time for a rate hike is nearing.

AUD

The Australian Dollar had a quiet session yesterday, trading in a thin 50 pip range against the Greenback. However there was a bit more action against other crosses with the AUD rallying against the Japanese Yen and Canadian Dollar, but falling heavily against the UK Pound and New Zealand Dollar.

The AUD did hardly anything against the Greenback in the second half of the session yesterday, with reasonable US economic data offset by firmer iron ore prices.

CHF

The Swiss Franc weakens and the nation’s central bank must decide whether it can afford to relax a little.

The currency’s 5% decline against the Euro over the past three months is good news for the Swiss National Bank (SNB) in its long-running bid to revive inflation.

Swiss economic growth trailed that of the Euro zone in the first half of this year and inflation remains muted, giving rate setter’s ample grounds to keep policy loose. The SNB, which will update its forecasts this week, predicted in June expansion of about 1.5% this year and inflation of just 0.3%. Although we have seen the Swiss Franc slip against the Euro, it has climbed against the Dollar in recent weeks.

ZAR

South Africa’s Rand retreated yesterday as a resurgent Dollar pushed back and wiped away early demand for risk currencies, while turning up technical pressure on the local unit.

The latest political spat between the central bank and public protector had yet to affect trade in the Rand, traders said, with technical considerations the main focus. Data released yesterday showed agriculture, forestry and fishing making strong contributions to the strongest quarter-on-quarter growth rate in a year.

This morning we see the Rand losing ground across all currencies, with GBP/ZAR trading at 17.34 and USD/ZAR at 13.02 (at the time of writing).

NGN

On Monday Nigeria’s Central Bank will start issuing electronic certificates for capital imported into the country, in a bid to improve its currency transfer process.

Nigeria grew out of recession in the second quarter as oil revenues rose, but the pace of growth was slow, suggesting a fragile recovery.

We saw the Naira depreciated against the Dollar slightly at the parallel market, USD/NGN 367 from N365. The Naira also weakened against the GBP from N472 to N476.

Exchange4free Global Forex Report (06/09/2017)
Exchange4free Global Forex Report (11/10/2017)

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