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Global Forex Report - 16 February 2016


Some of the largest and well-known US hedge funds have suffered further sharp losses from this year’s path in equities and commodities, raising the prospect that investors pull more money from the industry.

Friday’s trade saw GBP/USD within the range of 1.4441-1.4571. The pair closed at 1.4507, edging up 0.21% on a daily basis. This uptick in USD to GBP and the USD to EUR exchange rates is mostly due to retail sales figures, which was higher than the 0.1% anticipated dip and rose up to 0.2%.


The Financial markets in Europe got a boost after the Central Bank has said again that more stimulus would be considered at the next policy meeting in March. Germany’s DAX index was up 2.7%, France’s CAC 40 surged 3% and Britain’s FTSE 100 gained 2%.

The EUR/USD pair is trading at its lowest since last Wednesday at 1.1180, and there are further suggestions showing a decline is likely. The GBP/EUR rate today is relatively static around 1.294.


Since November, Sterling has weakened by around 8% on a trade-weighted basis, according to Goldman Sachs. This recent decline comes as global growth worries have weighed most noticeably on rates in the UK, with the timing of the rate hikes pushed back substantially.

There are UK Core Retail Sales and Unemployment figures that are due soon. For the past week, the GBP fluctuated wildly against the USD on the foreign exchange rate movement.


The AUD is rallying against both the GBP and USD as the reserve Bank of Australia confirmed they are yet to be shaken into action by recent market turmoil.

The AUD had strengthened after the release of RBA minutes, which showed the central bank has not shifted its conditional easing bias. However, the currency failed to maintain gains that too despite the uptick in the oil, copper and Chinese equity markets.


After a long downward road, the CAD/USD exchange rate has found some support. Although there are signs that show more downside ahead for the CAD.

Central banks of all the biggest economies are moving in tandem, low-interest rates have become commonplace. Which is trying to boost their struggling economies, central banks have been cutting rates. That has caused depreciation on the CAD

Canada is heavily reliant on oil since the commodity makes up the biggest portion of its foreign exports. The drop in oil price has negatively affected the CAD historically.


The SA Rand has regained some strength Tuesday morning, following some risk appetite in the market due to slightly higher oil price, Asian equities are up marginally and few hints from Mario Draghi (ECB) speech yesterday on potentially further easing in March. This has relieved some pressure on the SA Markets for now.

The positive performance may be short-lived, with a few local and US data coming out tomorrow:

Wednesday: SA CPI; SA retail sales; US housing starts; US building permits; US PPI; US industrial production; US Fed minutes from January FOMC meeting

More importantly, all eyes will be on Minister Gordhan’s budget speech next week, as he may run into a few obstacles to sway Foreign Investors and send strong signals to the rating Firms. We may be in for further Rand volatility leading up to the speech, with ‘December’s scandalous finance minister decisions’ sitting in the back of everyone’s heads.


The Naira yesterday suffered its biggest daily depreciation against the dollar as the exchange rate rose to NGN 345 per dollar. This shows an NGN 20 depreciation compared to the rate on Friday NGN 325. The Naira has been on a steady decline since the 12th of January 2016 when the Central Bank of Nigeria stopped dollar sale to BDC’s.

Bureaux De Change sources confirmed that there is a huge demand for dollars and sterling but there is no supply. The way things are going the rate might touch NGN 350 to the dollar before it stabilises.


The rupee was trading lower by 15 paise at 68.22 against the American currency in early trade today.

Forex dealers said apart from the increased demand for the USD from importers and the USD’s gains against other currencies overseas, India’s exports contracted 13.6% in January, the 14th month in a row, put pressure on the rupee. They said, however, a higher opening in the domestic equity market, capped the rupee’s losses. 

ZAR Forex Report - 16 February 2016
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