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Exchange4free Global Forex Report (22/02/2017)


Markets are keenly waiting for the FOMC (Federal Open Market Committee) minutes, from the previous meeting on the 1st of February, which should be released today. Since the last meeting we have seen inflation in the US surprise on the upside and retail sales for January rise above expectations. Fed officials have been hawkish in their comments, which has seen a rise in the probability of the Fed hiking sooner, in May rather than June.

The US dollar lost ground in Asia as investor awaited the minutes from the FOMC, as markets are waiting for clues as to when interest rates hikes will be coming.


Bailout funds worth 2.8 billion euro are set to be delivered to Greece after the Eurozone’s finance ministers voiced their approval for the support package. Greece’s level of debt stands at roughly 180 percent of its GDP. In lights of its debts, the International Monetary Fund (IMF) has raised concerns over whether Greece will be able to achieve the primary surplus targets which have been set for it in exchange for loan funding.

The EUR/USD has fallen just shy of new monthly lows, as the US Dollar resumes strengthening in the short term. EUR/USD has been trending lower in the short term, after putting in a new 2017 high at 1.0829 earlier in the month.


The UK governments’ balance sheet liabilities could “crystallise” if the Brexit process leads to a significant economic shock, according to the country’s Public Accounts Committee.

A big day for GBP as it breaks above a key technical level against the EUR for the first time in months in what could be a sign that the recovery is becoming more entrenched. Borrowing has fallen to the lowest level in nine years. GBP remains range bound as official figures give the chancellor of the Exchequer a pre-Budget boost.


Commodity prices, such as iron ore continue to offer support for the AUD. Higher price levels are boosting Australia’s terms of trade and generating a shift in the trade and current account balances. These changes are fundamentally AUD positive. When combined with the improved global growth outlook, Asian export momentum and geopolitical risks in the Eurozone, the bias is for further near-term EUR/AUD downside.


The Canadian Dollar Dips ahead of the Fed minutes. Canadian dollar has actually managed to strengthen by just over 1% as it held broadly steady this week at just over 76 cents making it one of the strongest currencies in the world over that stretch, trailing behind only Brazil and Taiwan.

There are three reasons why the currency has held up so well in recent months. First, firmer oil prices, as CAD is commodity based. Second, the USD itself has lost steam in recent weeks. Third, Canada’s economy has been surprisingly and refreshingly perky in recent weeks.


The Naira has been devalued again due to the shortages in Dollars within the country. Nigerians requiring dollars for offshore travel or school fees can buy dollars at nearly 20% above the official rate. Covering 20% of dollar demand, the new regulation could ease the parallel market slightly, but the absence of consistent USD inflows keeps the market from trading efficiently.

After CBN’s announcement to step up dollar demand, the authorities sold USD 370.8m at forward exchange rates up to 15% weaker than the interbank rate.


The market is awaiting today’s Budget speech. A few things that are expected to come out are new tax adjustments, a new VAT rate hike, this coming from the finance minister’s speech which should cause some movement in the market. Gordhan is looking to keep the state spending low and to keep off a junk credit rating. Bonds are expected to continue trading in a narrow range, with all eyes watching the news wires for possible headlines to provide more clarity on our local political situation while we wait for the budget speech to be delivered.

Exchange4free Global Forex Report (15/02/2017)
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