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Exchange4free Global Forex Report (24/05/2017)

USD

Tuesday saw the release of US services PMI increasing to a four-month high of 54 points in May from 53.1 points in April; coming in above the expectation of 53.1 points. The above is attributed to growth in new business and recovering job creation.

Elsewhere, President Trump highlighted his plans for budget cuts in healthcare and food assistance programmes while emphasising greater allocation of funds towards military spending. The market looked favourably on this and hence led to some dollar strength on the day.

There is also an FOMC meeting later today, which investors will be watching closely for any possible hints of a rate hike in June.

EUR

The Euro continues to trade at levels just below 1.12 against the USD; there are many factors contributing to this, from a mild USD weakness and a Euro strength perspective.

Data out from Germany earlier this week shows that business confidence is at a 26 year high, as results of the Business Confidence Index show a rise to 114.6 points, from 113.01 in April.

Another key factor to Euro strength comes from the ‘flash’ estimate data released on Tuesday this week. This showed that the Eurozone economy has maintained momentum gained in April; as manufacturing PMI led the charge, it came in at 57.0, which is its strongest result since 2011.

GBP

The UK woke up to shocking news on Tuesday morning of the Manchester attacks. Despite this, the Sterling recovered well against both the USD and EUR. The Sterling reached levels as high as 1.16 on the day against the EUR.

According to a few market commentators, markets have become less volatile to one-off terror attacks and hence hold their position a lot better than in the past.

The Bank of England's team will face parliament later in the week over their latest publication of quarterly inflation. The publication showed rising pricing. Questioning is expected to revolve around how the bank plans on curbing rising prices.

AUD

Australia’s largest trade partner, China, was hit by a downgrade earlier today. Moody’s dropped China's rating from Aa3 to A1, citing concerns over the slowdown in the economy and growing debt. This in turn led to a weaker Australian Dollar against all major currencies (prior to this, the AUD was trading around 3 week high levels against the USD).

Over the next coming days, we could see the AUD benefit from the market expectation of further cuts in oil production from OPEC on Thursday.

CHF

The CHF seems to be recovering from the lows we saw earlier (against the USD). However, it is expected to remain just above 0.97 (USD/CHF) at least until later today, when the FOMC minutes begin.

ZAR

The Rand traded stronger yesterday and was seen as the best performer amongst its emerging market peers, strengthening by more than 1%. The strength came largely due to rumours that the NEC would discuss removing President Zuma at their next meeting falling between 26 and 28 May 2017. These rumours have since been denied by the party.

Local CPI data came out earlier with news providing some insight as to whether or not current policy is assisting the reserve bank in controlling the upper inflation target of 6%. Bloomberg consensus was for a figure of 5.6% y/y in April from 6.1% y/y in March. The Actual figure is 5.3% y/y showing slowing inflation. USD/ZAR briefly went below 13.00 on the news.

NGN

Nigeria's central bank kept its benchmark interest rate at 14 percent on Tuesday, just hours after statistics released showed that Africa’s biggest economy contracted in the first quarter.

Governor Emefiele, has told reporters that the central bank wanted to end the spread between the black market and official exchange rate, and that they feel that their current policies are working.

Gradual recovery is expected in economic activity over 2017 and 2018.

Exchange4free Global Forex Report (10/05/2017)
Exchange4free Global Forex Report (01/06/2017)

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