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Exchange4free Global Forex Report (16/08/2017)


The US Dollar gained some much needed strength yesterday. This following better than expected retail sales figures for July. The figure came in at a 0.6 percent rise, versus the expected 0.3 percent. The figures for the previous 2 months were also revised upwards, showing that the consumer sector is in a positive space with a buoyant jobs market.

On the back burner, geo-political tensions between North Korea and the USA remained somewhat in focus, with investors gradually moving away from their risk averse strategies over the past few days. The market seems to have shifted towards the release of some economic data coming out later this week.

Today we see the release of the US Fed FOMC (Federal Open Market Committee) minutes which should be interesting given disappointing inflation figures in the past few months as well as the increase in retail sales from yesterday.


While there isn’t much news out of the Eurozone this week, we will see the release of GDP data for much of the Eurozone later today.

Industrial production figures released yesterday show signs of a slowing Eurozone economy. The figures showed that production increased by only 2.6 percent in June (verses the expected 2.8 percent) which is significantly down from May’s figure of 3.9 percent.


On Tuesday the Pound fell against both the EURO and USD, motivated by worse than expected inflation figures and lowering the likelihood of an interest rate hike in the near future.

The Sterling lost 0.45 percent and moved to 1.0954 (GBP/EUR) on the back of the news. It’s weakest level against the Euro in eight years.

The Sterling also continued to lose momentum as the Office for National Statistics reported that prices rose by 2.6 percent versus the expected 2.7 percent. The focus will now shift to GDP growth and wage data.


Yesterday the Australian Dollar pulled back sharply following better than expected US Retail Sales data. US retail sales rose by 0.6 percent versus the expectation of 0.3 percent for July.

It’s not all bad news, the release of the Reserve Bank of Australia’s minutes from their August meeting shows that the bank could raise interest rates in the future but are holding off for now. Despite this, there was not much of a reaction from the market as the Australian economy is faced with slowing growth and rising household debt.


The Swiss Franc continued to rapidly appreciate in recent days to reach even higher levels against the USD and EUR. What is already deemed an overvalued currency by the Swiss National Bank (SNB), continues to gain strength as investors become more risk averse in light of increasing geo-political tensions between North Korea and the USA.

However, there are various reasons why the CHF could depreciate over the next year, including the fact that it is overvalued and the fact that the SNB plans to maintain the current interest rate differential with the Eurozone and other countries. The aim of this will be to weaken the CHF and increase the inflation rate.


As risk aversion subsides in the global market, the Rand continues to strengthen slightly. The Dollar opened at 13.31 this morning with EUR/ZAR and GBP/ZAR at 15.63 and 17.13 respectively. The market is expected to trade sideways this week with no major data releases or economic events on the calendar.

Earlier in the week, Moody’s released their regular credit opinion of South Africa in which they outlined various factors for concern including high unemployment, low growth as well as the accumulation of public and government contingent liabilities. A few positive factors did come to light including the well-established banking sector and sound macroeconomic framework.

Today we will see the release of local retails sales with an expected figure of 2 percent.


On Tuesday The Central Bank of Nigeria (CBN) injected $364 million into the foreign exchange market. The move comes in a bid to sustain intervention in the market and boost liquidity in the foreign exchange market.

Despite this, the Naira depreciated to N370 per Dollar yesterday in the parallel market, rising by N2 from N368 per Dollar on Monday. Consequently the Naira has depreciated in the parallel market by N3 this week.

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