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Exchange4free Global Forex Report (28/03/2018)

USD

The US Dollar rose against most major currencies during Tuesday's session after three disappointing sessions. The gains in the US Dollar was supported by a decrease in trade war anxiety, for investors believe that it can be resolved with proper negotiations.

Speculators will be keeping a close watch on the US today, as the third estimate of the US fourth quarter gross domestic product (GDP) will be released. The market expectations put the GDP around 2.7% after the measures of growth was revised downward to 2.5% in the second estimate.

Another reason for the gains in the US Dollar, was due to weaker than expected European data, especially regarding the weak German Import Prices and low business confidence of the Eurozone. Currently the EUR/USD pair is trading around 1.23875, down 0.197% since Tuesday.

EUR

During Tuesday’s session, the EUR/USD pair posted slight losses, and was trading around 1.2412, down 0.3% on the day. Speculators believe that the reason for the decline in the currency pair, was due to the 0.6% decline in the German Import Prices, which was a bigger decline than the expected 0.3%. The decline in the Import Prices has been the first since July 2017.

According to a senior European Central Bank (ECB) policy-maker, the ECB will most likely stay on course with their stimulus program. The ECB will shift their focus to inflation. If inflation moves closer to the the target of 2%, the ECB could decide to not extend their stimulus program and raising interest rates may be a possibility in 2018. Throughout the Eurozone there are still concerns surrounding US president Donald Trump’s tariffs. The German Ifo business climate dropped to 114.7 in March, the lowest in 11 months. The imposed tariffs could hurt the business climate throughout the Eurozone and impact the Euro negatively. Currently the EUR/USD pair is trading around 1.23875, down 0.197% since Tuesday.

GBP

The Sterling has shown significant gains against major currencies such as the US Dollar and Euro, but analysts at Barclays believe that these advances are coming to an end. Barclay’s near term expectations for the Sterling had realised in the previous week as the UK and EU reached an agreement surrounding Brexit.

Hamish Pepper, a foreign exchange analyst at Barclays, says that the Sterling is forecasted to appreciate over the long term, but sees no near-term gains for the Sterling. Interest rate hikes for the UK are expected for may 2018 and February 2019. Currently the GBPUSD pair is trading around 1.41750 up 0.5% from last week.

AUD

The Australian Dollar continued to post losses against all major currencies during Tuesday’s session. The AUD/USD currency pair was trading around 0.7676, down 0.9% on the day. The currency pair came under pressure as the concerns surrounding Trump’s tariffs continued.

According to analysts at Bank of America Merril Lynch, the Australian Dollar is expected to drop even lower in the near future, should the property market in China slow down further. The deceleration in iron ore shipment growth warrants caution against buying AUD. The decline in iron ore shipment from Australia is one of the main reasons for the depreciation in the Australian Dollar. Currently the AUD/USD is trading around 0.768.

CHF

During the Asian session this morning, the CHF/USD currency pair was trading around 0.9464, with the US Dollar trading a bit higher against the Swiss Franc after yesterday’s close.

Analysts and market speculators alike will keep a close eye on Switzerland’s ZEW expectations survey for March as well as the KOF institute's spring economic forecast report. The CHF/USD pair is up 0.04% from yesterday’s 0.94580.

ZAR

The South-African Rand has rallied strongly over the past few weeks supported by an improving political landscape, but according to Julius Baer the Rand’s gains may be slowing down. The Rand held its ground after South-Africa narrowly avoided a credit ratings downgrade last Friday. Despite all the positive news in the country, the weak fundamentals, such as stagflation, high unemployment and weak fiscal outlook, still remain unchanged.

Later today the South-African Reserve Bank’s (SARB) Monetary Policy Committee (MPC), will meet to discuss the benchmark repo rate. The repo rate has remained stable at 6.75% since July 2017. Analysts expect the rate to drop to 6.50%. If the repo rate does not drop, the Rand can be expected to weaken further. Currently the USD/ZAR currency pair is trading around 11.6997 compared to 11.7898 from last week Thursday.

NGN

The Naira has remained relatively stable for the past month. However, Aminu Gwadabe, President of Association of Bureaux De Change Operators of Nigeria (ABCON) stated that there have been signals of foreign investors exiting the equities market ahead of the 2019 elections. With these investors having invested billions of dollars in the market raises concerns for the Naira’s stability.

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