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Exchange4free Global Forex Report (26/07/2017)

USD

Political concerns continue to weigh heavily on the USD ahead of tonight’s Federal Reserve (FED) rate decision. As a result, the greenback pared its losses against most majors on the back of positive US consumer data. Confidence Index rose to 121.1 (est. 116.5) from a revised 117.3 in June).

Tonight all eyes will be on the statements being made as there are no updated projections and no press conference (policy rates are expected to remain unchanged). The expectation is for the FED to wait until the September meeting to make an announcement on what the Quantitative Tightening procedure will entail.

EUR

Last week Thursday we saw the European Central Bank (ECB) mirror a message of caution emanating from some major central banks, as strong growth has not yet translated into higher consumer prices. President of the ECB, Mario Draghi’s comments drove the Euro to its highest level against the Dollar in nearly two years.

Draghi’s bullish description of the eurozone economy appeared to back the theory that an end to the ECB’s support of bonds would enhance the Euro’s appeal for investors.

The future of the program is expected to be discussed at a policy meeting on the 7th of September.

GBP

Data released in the UK earlier today showed that growth in the UK economy edged up in line with forecasts in the second quarter (the economy expanded by 0.3% - up from 0.2% in the first quarter).

This represents the 18th quarter in a row of growth in the UK. On the downside, Britain has now recorded its weakest 6 months of growth since 2012.

Today’s second quarter Gross Domestic Product (GDP) estimate was just below the Bank of England’s expectations of 0.4%, but falls in line with the average forecast from the private sector.

AUD

The latest Australian Bureau of Statistics (ABS) inflation reading came in at 0.2%, which is below the previous reading of 0.5% for the March quarter and 2.1% for the year.

Core inflation rate has now stayed below the target rate for 6 quarters in a row.

The odds of a rate hike in the foreseeable future have now dropped further, and serves as a reminder of why interest rates are at record lows.

CHF

The index for consumer spending indicator (UBS) for June 2017 released earlier today posted a rise from 1.32 to 1.38. A rising indicator value reflects rising consumer spending, which generally leads to economic growth.

Despite this, the USD/CHF cross is currently trading around multi-day highs. The pair nears the 0.96 resistance level, as bearish USD bets seem to be losing momentum.

A prevalent risk-on mood (as depicted by solid gains in European equity markets) can also be seen denting the Franc’s safe haven appeal.

ZAR

The interest rate was cut by 25 basis points to 6.75% last Thursday. This came as quite a surprise to most and resulted in the Rand weakening below its resistance level of 13.00 against the USD, closing at 13.02. This was the first rate cut in 5 years.

Despite local factors, the Rand has been performing resiliently. However it has not managed to test any new lows. From a technical perspective, this suggests a strong possibility of further ZAR losses.

NGN

As expected, the Central Bank of Nigeria (CBN) left rates unchanged at 14% yesterday, for the 6th consecutive meeting. The governor mentioned that reducing the policy rate has potential negative effects of upstaging the currency stability achieved thus far.

The next Monetary Policy Committee (MPC) meeting is scheduled to take place between the 25th and 26th of September.

Exchange4free Global Forex Report (19/07/2017)
Exchange4free Global Forex Report (02/08/2017)

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