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Exchange4free Global Forex Report (23/08/2017)

USD

All are waiting in anticipation for the speeches to come at the Jackson Hole Economic Policy Symposium which starts this Friday. Representatives from over 40 countries’ central banks will be attending this annual gathering. Federal Reserve Chair, Janet Yellen, and the president of the European Central Bank, Mario Draghi, will discuss some of the common challenges faced by the two most influential central banks. Many strategists are not expecting any major policy changes from the central banks attending.

The US Dollar has fallen against other major currencies today. The Greenback has dropped around 0.22% against the Sterling and is currently sitting at around 1.278 (GBP/USD). The Euro has also strengthened substantially against the US Dollar on the back of Draghi’s speech along with positive economic data for the Eurozone.

Last but not least for the US Dollar, US President Donald Trump has threatened a government shutdown if funding for the border wall between Mexico and the USA is not approved by congress.

EUR

The Euro has remained one of the best performing major currencies in 2017. We have seen it steadily strengthening against both the US Dollar and the British Pound, which is owed to its thriving economy.

President of the European Central Bank, Mario Draghi, received a positive reaction to his speech earlier today in Germany. He stated that the quantitative easing has been a success thus far and that the monetary policy should be prepared for any new challenges.

Services PMI data for the Eurozone released today, revealed a fall to 54.9 with the forecast at 55.4. However, better than expected PMI data was released in Germany.

Draghi’s speech at the Jackson Hole should be closely watched for remarks relating to the Eurozone monetary policy.

GBP

Forecasts for the Pound were downgraded against the Euro in the region of 3-4.5% by J.P. Morgan earlier this week, however upgraded against the USD. The Pound has been the worst performing major currency in the past month which is partly owed to the expectation that the Bank of England would raise interest rates but failed to do so. The Pound has fallen almost 9% against the Euro since April this year.

While UK Brexit concerns increase, there has been much talk regarding the Pound to Euro hitting parity by next year. According to Brexit secretary David Davis, we can expect more papers to be published over the coming months as the UK sit down with European Commission to discuss future relationships between the neighbouring countries.

AUD

The Australian Dollar has continued its gains against the Pound. Along with the uncertainty around Brexit; the rebound of the AUD can be partly owed to the rise in commodity prices and a recovery in domestic data. Job growth rose in July and labour market conditions have remained healthy.

The AUD has also been strengthening against the US Dollar. According to a senior strategist at Westpac, Imre Speizer, irrespective of a lack of news the US Dollar and government bonds had fallen. The AUD rose against the USD yesterday from 0.7910 to 0.7951.

Although the Australian Dollar has had positive momentum, the force has not stronger than Euro.

CHF

The Swiss Franc saw a decline against most of the major currencies on Monday. The Franc dropped to 0.9682 against the USD; 1.1364 against EUR and 1.2467 against GBP. With no supporting data for the fall in CHF, the independent weakness is being seen as a shift in attitudes of investors.

The financial sector seems to be shifting focus to new markets beyond the traditional "safe haven" Swiss Franc.

ZAR

South Africa’s inflation rate has hit its lowest levels since September 2015 dropping to 4.6% year-on-year in July. This slowdown in inflation will boost the chances of further interest rate cuts by the South African Reserve Bank as they seek to support economic growth.

The Rand remained relatively stable this morning as investors have abstained from making major moves before the inflation data was released.

It has since weakened across most of the majors. The weakening of the Rand could be owed to the potential of a further rate cut being implemented according to Andre Botha from TreasuryOne.

Yesterday, ratings Agency Moody’s downwardly revised their growth forecast for the South African economy to 0.5% for this year and 1.2% for next year.

NGN

Nigeria’s President, Muhammadu Buhari, returned home this week after an extended three month medical leave for an unspecified illness. He returned home from the UK on Saturday and received a warm welcome from Deputy President Yemi Osinbajo who has been covering for him in his absence. This was the second time this year the President has sought treatment in the UK. Earlier this year he was absent for seven weeks. President Buhari addressed the country on Monday after resuming his duties.

However, the refusal by officials to disclose nature of his illness has caused speculation as to whether the 74-year-old is well enough to run the Nigerian Economy or not.

Exchange4free Global Forex Report (16/08/2017)
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