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Exchange4free Global Forex Report (14/06/2017)

USD

All eyes will be on the FOMC (Federal Open Market Committee) meeting later this evening, as the FED (Federal Reserve) is expected to deliver their second rate hike of the year. The expectation is for a 25bp hike.

With the hike fully priced in, focus will be on what plan of action the FED will implement to reduce the size of its balance sheet this year. 

Should the FED not provide a satisfactory solution towards reducing the balance sheet, there could be a very valid reason to look at USD weakness continuation.

EUR

According to analysts at Société Générale, there has been notable strengthening in the Euro and they expect this trend to continue in 2018.

Overall expectations of the Euro appreciating have grown and this is owed to the improvements of the Eurozone economy. Furthermore, analysts expect the European Central Bank (ECB) to respond with their stimulus programme.

In the monetary policy meeting last week Thursday, Mario Draghi (president of the ECB) announced that interest rates are remaining unchanged and are expected to remain constant until interest rates fall in line with growth. The growth forecasts were upgraded for the Eurozone while inflation stays low and flat.

GBP

It has been a messy week for UK Prime Minister Theresa May and the Tories, as their plan to increase their seats in parliament backfired – instead of gaining seats they lost 12. This in turn lead to massive volatility for the Sterling over the last couple of days, as uncertainty set in.

The Sterling recovered some of the lost ground against fellow majors after CPI results showed an increase of 2.9% - versus a consensus of 2.7%.

At the time of writing, the GBP/USD is trading around the 1.2750 mark.

AUD

The AUD lost some ground against its peers after a disappointing AU confidence score. The latest losses in the AUD/USD can be attributed to AUD weakness rather than USD strength.

On Thursday major Australian jobs data for May will be released. The unemployment rate is predicted to stagnate at 5.7%, while employment change is expected to come in at 10 K.

If the employment change rises by more than the forecast, we could see a drop in the unemployment rate which might trigger sharp AUD gains.

CHF

The Swiss National Bank (SNB) will be holding the SNB Monetary Policy Assessment tomorrow. According to analysts polled by Reuters, it was found that the SNB is likely to keep its monetary policy loose at least until 2019; this despite the decline in political risk throughout the rest of Europe. Additionally, it is predicted that the SNB will keep the target range for the 3 month Libor unchanged at -2.25% to -0.25% and negative interest rates on sight deposits at -0.75%. Despite predictions from all 39 analysts at the Reuters’ poll are aligned; it cannot go unnoticed that in previous meetings the SNB has been very unpredictable.

ZAR

The ZAR edged firmer against the USD on Wednesday, despite a recent ratings downgrade by Moody’s taking South Africa to Moody’s lowest sovereign investment grade on Friday. 

The sovereign ratings downgrade was followed by a cut in ratings in various banks and companies across the nation.

According to Nedbank analysts, from a technical perspective the USD/ZAR exchange rate could drop down as low as 12.50. Local fundamentals however, do not seem to support this scenario.

NGN

Yesterday the Central Bank of Nigeria (CBN) announced in the Investors and Exporters window of the foreign exchange market has reached the value of USD 2.2 billion. This in turn, saw the Naira appreciate to 364 against the USD.

The Naira is expected to extend gains against majors, as the CBN continues with injections into the foreign exchange market.

Exchange4free Global Forex Report (07/06/2017)
Exchange4free Global Forex Report (21/06/2017)

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