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Exchange4free Global Forex Report (14/02/2018)

USD

The US Dollar has started the week on a back foot, as the Dollar has weakened against G10 currency pairs. Investors and analysts alike, are waiting for the Consumer Price Index (CPI) data to be released later today. The market is expecting the US CPI to increase moderately, which indicates that consumer and economic activity is increasing in the U.S.

The announcements regarding the Euro Zone economic activity, could also be a reason for a weaker U.S Dollar. On Tuesday Mario Draghi, President of the European Central Bank (ECB), had said that Europe has recovered from the recession and that economic activity has picked up. Despite a slight dip in the U.S Dollar, markets have shown to be stable over the past week. Currently the EUR/USD pair is trading around 1.23765, compared to 1.22152 on Friday.

EUR

During Tuesday’s session the Euro surged by almost 0.50% and traded at a high of 1.2370 against the U.S Dollar. The surge in the EUR/USD pair was the result of a plunge in the U.S Dollar and positive announcements regarding the European economy.

The President of the ECB, Mario Draghi, announced that Europe has finally recovered from the recession and that the Euro Zone is firing on all cylinders and performing better than expected. Currently the EUR/USD pair is trading around 1.23765, compared to 1.22152 on Friday.

GBP

The Sterling is holding steady following the release of inflation data earlier in the week. Inflation data came in better than expected reaching its highest levels in six years in January with positive contributions from the recreational and leisure sectors.

The Sterling rose on the announcement from 1.3924 (GBP/USD) after the data, up from 1.3886, with the view that it could increase the likelihood of a rate hike from the Bank of England this year. There is now a 70% chance that the central bank could raise rates by 25 basis points before the end of May 2018.

Wages data to be released next week, as well as a major upcoming speech by Theresa May should provide further insight into the direction of the Sterling in weeks to come.


AUD

On Tuesday, the Australian Dollar showed an unusually weak performance, finishing mixed against major currencies despite the recent strengths in stocks and commodities. The disappointing performance in the Australian Dollar is the result of the Consumer Price index (CPI) data from the U.S, that will be released later today. Investors and market speculators expect the CPI to increase in the U.S. 
Currently the AUD/USD pair is trading around 0.78755, an appreciation in the pair, compared to 0.77622 on Friday.

CHF

Consumer Price Inflation (CPI) released by the Federal Statistical office on Monday indicated a slower inflation rate for January. CPI advanced to 0.7% annually from 0.8% in December. The forecast was that the rate would remain constant at 0.8%.

The Swiss Franc is predicted to fall against the Euro in 2018. This is owed to a tightening monetary policy and the prediction that the currency will not be allowed to gain further ground as the central bank still believes the currency to be overvalued. According to participants in a Reuters poll, the Swiss Franc is expected to reach 1.2 against the Euro by the end of this year.

ZAR

The South-African Rand is continuing its positive streak against the US Dollar as rumours surrounding President Jacob Zuma’s removal take flame. On Tuesday morning the NEC, the ANC’s highest decision making body, resolved to recall Jacob Zuma. The Rand was trading around 11.93 against the Dollar at the time, coming in below the the expected level of 12. The USD/ZAR pair could drop as low as 11.78, should a deal be reached on Jacob Zuma’s future. Currently the pair is trading around 11.86469.

The unemployment rate announcement yesterday has shown positive results in the fourth quarter. Unemployment in the fourth quarter came in at 26.7%, down 1% from 27.7%, according to Stats SA. Analysts say that the outlook on the job market remains uncertain, but the prospects are better.

South-Africa’s political landscape is improving, while the global economic growth and commodity prices are expected to increase throughout 2018. Speculators believe that the global growth and increased commodity prices should have a positive effect on the unemployment rate and the Rand.

NGN

The Nigerian Central Bank continued to inject funds into the interbank foreign exchange market on Tuesday, in an attempt to improve liquidity and alleviate the Dollar shortages. The injection yesterday totalled USD 210 million. The central bank also went on to confirm that further interventions will take place, in line with their pledge to sustain liquidity and stability in the market.

Despite the above mentioned injection, the Naira depreciated to 360.22 per Dollar, edging lower than the close of 360.03 NGN/USD from Monday. On the parallel market, the Naira remained stable at 363 per USD.

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