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Exchange4free Global Forex Report (18/10/2017)

USD

Federal Reserve Chair Janet Yellen’s term expires in February 2018 and it has been said that President Donald Trump has been leaning towards nominating economist John Taylor from Stanford University. This could give rise to a 5% increase of the US Dollar according to the speculation of strategists. This would be a result of “Taylor’s Rule”; his economic model, which is indicating that the interest rate should have been pushed up from as early as 2011 and 2012 says John Higgins at Capital Economics.

Later today, all eyes will be on the US with the release of the central bank’s Beige Book which indicates regional economic conditions.

The US Dollar has been gaining ground against other major currencies, which is owed to the economic data released on Tuesday by the Labour Department; the price index for exports rose by 0.8% in September and import prices increased by 0.7%.

Recent positive data out of the US has set the odds of a December rate hike at 91%.

EUR

Mario Draghi, President of the European Central Bank (ECB), made the opening speech in Frankfurt today. Draghi spoke on the creation and promotion of economic growth for all.

He explained that the support for the economy from the ECB has given the countries in the Eurozone a “window of opportunity” to act. He repeatedly called on the countries to use this opportunity to ensure that market reforms promote growth for all.

The Euro has strengthened against the Pound and is currently trading around 1.120. EUR/USD has remained in a narrow range trading around 1.18.

GBP

The Labour Market report was released today. The unemployment rate has remained at its lowest level since 1975 at 4.3%, which is in line with the expectations. Average earnings increased by 2.1% in the past year while the inflation rate, which was released on Tuesday, rose to 3%, the highest it’s been since 2012. Average earnings have been increasing at a slower rate in comparison to inflation.

This information could affect the interest rate decision for November by the Bank of England. There has been speculation that the UK may raise interest rates for the first time in over a decade. According to Mark Carney, Governor of the Bank of England, inflation is expected to increase further.

The Pounds reaction to these statistics has indicated that the information was more or less in line with the expectation. We see GBP/EUR trading around 1.1220, which is up 0.1% and GBP/USD trading around 1.3180, showing a drop 0.06%.

AUD

The Australian Dollar traded in a narrow range against the USD over the last couple of days, as upbeat US data balanced out with suggestions that the Australian retail sales will have rallied in September.

The higher probability of a rate hike in December for the US was not a detrimental blow to the AUD/USD pair, as the National Bank of Australia’s cashless retail sales index indicated a strong rebound in spending in September.

The AUD/USD pair faces possible further downward movement, as economists forecast that Australia’s latest employment figures will show a dramatic decline in the number of Australians entering work in September, whereas the USD may push higher, if speeches from a couple of Fed policy makers are positive.

CHF

Chairman of the Swiss National Bank, stated that even though the Swiss Franc has experienced reduced upward pressure, they are going to remain committed to their current expansive monetary policy.

The Swiss Franc was trading slightly higher this morning against USD at 0.9778 in comparison to yesterdays close at 0.9781.

ZAR

It comes as no surprise that the Rand lost more than 0.5% in just minutes after President Jacob Zuma announced his second unexpected Cabinet reshuffle.

Rumours are that this reshuffle was set in motion as a tool to strengthen position of the nuclear deal and also to strengthen the support for Dlamini Zuma in the ANC presidential race.

Further, South Africa’s Supreme Court of Appeal decided to uphold the decision of the High Court which was to reinstate the corruption charges against President Jacob Zuma on Friday. The Rand indicated a positive reaction to this information by climbing 0.74% to 13.3775 against the US Dollar. However, according to Minister of Finance, Malusi Gigaba, these corruption charges are “concerning for the South African economy.

Consumer inflation data released today by Statistics South Africa indicated an increase to 5.1% year-on-year in September from 4.8% in August.

NGN

As per the Central Bank of Nigeria, Nigeria’s external reserves have risen to the highest level in almost three years as it hit $33.11 billion last Thursday, riding on the back of increased oil earnings.

The latest inflation figures show a reading of 16% - which matches the figure from August. The official USD/NGN mid-market rate is 360 at the time of writing.

Exchange4free Global Forex Report (11/10/2017)
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