Archive: July2017

Dollar drops as Trump sacks Scaramucci

31 Jul 2017
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US Dollar

Expected Range 1.3155 – 1.33

Shockwaves rippled through US politics and beyond yesterday as Donald Trump again reshuffled his pack giving Communications Director, Anthony Scaramucci the boot after just ten days in the job. It appears newly appointed Chief of Staff, General John Kelly deemed a working relationship with Scaramucci as being unsustainable given his apparent lack of discipline and recent colourful comments about former colleagues Reince Priebus and Steve Bannon. As a result of yet more upheaval in the White House the dollar was sold off yesterday evening with cable cracking 1.32 as traders in Asia switched on for the day. Yesterday saw UK Net Lending m/m beat estimates showing £5.6B was lent to individuals in June. US data was again mixed with Chicago PMI printing 58.9 when 60.8 was forecast; Pending Home Sales m/m printed in the green however with a 1.5% uptick registered. A busy week of UK data kicks off today with the monthly Manufacturing PMI due this morning, a slight rise from 54.3 to 54.4 is pencilled in. This afternoon we have Core PCE Price Index m/m; Personal Spending m/m and ISM Manufacturing PMI from the States. GBP/USD trades at 1.3210.

Euro

Expected Range 1.1135 – 1.1240

More turmoil in Washington saw EUR/USD rally yesterday evening, rising above 1.18 for the first time since Jan 2015. As Trump continues to underwhelm and confidence in the Eurozone grows the shared currency has rocketed in the year to date. Back in January it looked like EUR/USD would drop below parity however it has surged nearly 15 cents! Data-wise the first reading of Julys Inflation in the EZ saw the core reading beat forecast printing 1.2% y/y. Yesterday also saw EZ unemployment drop to its lowest level since Feb 2009 coming in at 9.1% for June. Today sees the Prelim Flash GDP for Q2 with the bloc predicted to have grown at a healthy 0.6%. EUR/USD trades at 1.1810 with GBP/EUR at 1.1180.

Australian Dollar

Expected Range 1.6420 – 1.6575

The Aussie briefly rose back above 80 cents against the greenback on the back of Trumps latest reshuffle however it has since retreated below the big number. The latest rate decision from the Reserve Bank of Australia saw no change as expected from the current 1.5% although the accompanying statement alluded to concerns a strengthening Aussie could have on the economy, assisting the local dollar’s fall. GBP/AUD is at 1.6505. 

New Zealand Dollar

Expected Range 1.7530 – 1.77

Like the Aussie the Kiwi rose then fell back overnight with NZD/USD trading either side of 75 cents. There has been little date from NZ this week however tonight sees Unemployment data and the fortnightly Global Dairy Trade Price Index which has been trading close to zero over recent weeks. GBP/NZD trades at 1.7625. 

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Markets geared towards Super Thursday

30 Jul 2017
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US Dollar

Expected Range 1.3000 – 1.3160

The US dollar suffered at the end of last week with the release of its Q2 growth figures. Whilst the economy grew by a staggering 0.6% over the quarter, this was less than analysts had expected and as such the dollar sold off and finished the week down against all of the major currencies apart from the Swiss Franc. GBP/USD broke through the 1.31 (IB) handle, despite the fact that the UK’s GDP figure disappointed earlier in the week, expanding by only 0.3%. In comparison, the Spanish and French economies both grew by 0.9% and 0.5% respectively. Being the first week of the new month we are set to have the release of the very important jobs data on Friday in the form of the significant Non-Farm payroll numbers and hourly earnings. With the dollar set on a downward course, all eyes will be on these unemployment figures as strong numbers could mark a reprieve and FOMC members need some clear strength in data to push ahead with their interest rate increases later in the year.

It is probably set to be an even bigger week for the pound with a trifecta of crucial data releases. It kicks off with July’s PMIs before Super Thursday grips the market with the latest Bank of England Policy Announcement and the Quarterly Inflation Report. At the last meeting in June, the market was surprised as three MPC members voted for an interest rate hike and with a couple of new faces it will be interesting to see the voting pattern, their inflation report and the sentiment of their statement. Although a hike is not expected for August, the rumours of two more BoE members joining the ‘for’ vote may build momentum for sterling strength this week. 

Euro

Expected Range 1.1130 – 1.1200

As mentioned on Friday, we also saw the release of GDP numbers from a number of Eurozone economies last week. France reported Q2 growth at 0.5% and Spain hit 0.9%. For Spain this figure means that the economy has now returned to its pre-crisis levels. Alongside this, Eurozone economic sentiment reached a 10-year high and it would appear that as the two performances of the UK and EZ continue to diverge, it is Michael Barnier, the European chief negotiator for Brexit, who holds the upper hand against the UK’s David Davis during Brexit negotiations.

With the strong data releases the euro went back over the 1.17 (IB) level versus the US dollar and GBP/EUR has consolidated below 1.12 (IB). This week will also be a big week for EZ data as we have Eurozone inflation, GDP numbers and retail sales, but these releases may well be overshadowed by other news. 

Australian Dollar

Expected Range 1.6380 – 1.6550

The Aussie dollar finished last week relatively quietly at around GBP/AUD 1.64 (IB). Overnight we will see the latest RBA Rate Statement which will be very important to watch as Governor Lowe is expected to make reference to the country’s wage growth and relatively strong currency. Lowe announced last week that they did not ‘need to move in lockstep’ with other global central banks so the market does not expect him to indicate an imminent rate hike.

New Zealand Dollar

Expected Range 1.7410 – 1.7570

The New Zealand dollar kicked off the week with the latest ANZ Business Confidence survey which showed that both confidence and business activity was down for June. ANZ did point to the fact that this was normal due to the seasonal nature of the New Zealand economy. GBP/NZD closed last week above 1.75 (IB).

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Brexit: Will It Actually Happen?

28 Jul 2017
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Prime minister of Malta – “I’m starting to believe that Brexit will not happen.”   Joseph Muscat, the prime minister of Malta said that he sensed doubts about the UK’s decision to leave the EU. In an interview with Dutch newspaper De Volkskrant, Muscat stated that political leaders in Britain should fight for a referendum […]

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Markets await US GDP figures

27 Jul 2017
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US Dollar
Expected Range 1.2990 to 1.3160
The dollar clawed back some of its losses yesterday as a combination of profit taking and upbeat US data strengthened the greenback. GBP/USD touched 1.3155 yesterday morning before retreating as US Durable Good…

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Dollar dumped on dovish Fed

26 Jul 2017
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US Dollar

Expected Range 1.3090 – 1.32

The dollar was sold-off across the board yesterday evening as the US Federal Reserve left rates unchanged at its latest get-together. Keeping rates on hold was expected however the accompanying statement highlighted ongoing concerns with persistently below-target inflation calling into question whether we will see another hike this year. The statement also said the Fed would “begin implementing its balance sheet normalization program relatively soon” which could also give them another reason to stay put on rates for the rest of 2017. Earlier in the day, preliminary second quarter GDP figures were published from the UK showing a slight increase in growth to 0.3% from the 0.2% shown in Q1. The result was in line with most forecasts and gives further evidence that the effects of the decision to leave the UK are finally hitting economic performance.  Sterling’s drop since the Brexit vote is hitting consumers’ pockets and uncertainty over how the negotiations will play out is affecting business decisions. GBP/USD gyrated around the 1.3020 handle after the GDP number however rapidly pushed through 1.31 after the Fed’s statement and currently trades at 1.3125. Today sees Core Durable Goods Orders m/m from the States with a 0.4% uptick expected. 

Euro

Expected Range 1.1165 – 1.1280

The euro rallied to levels not seen since Jan 2015 on the back of the dovish Fed statement hitting a high of 1.1776 during this morning’s Asian session. With a slower pace of hikes for the Fed being priced in and confirmation of a tapering of QE from the ECB likely to be confirmed by September the shared currency has rallied five cents against the greenback in a month. There has been more good data from Spain this morning with its unemployment rate falling to 17.2% from 18.8% last quarter. Spain has been the Eurozone’s star performer over the past couple of years although there is still a long way to go to repair the damage done in 2008.  EUR/USD is currently at 1.1725 with GBP/EUR at 1.1205. 

Australian Dollar

Expected Range 1.63 – 1.6440

The Fed statement saw AUD/USD push through 80 cents for the first time since May 2015 hitting a high of .8065 before running out of steam. Like the euro the Aussie has been on a tear of late rising over six cents in the past couple of months with recent impetus provided by the RBA’s last meeting minutes which showed rate hikes are likely early next year. GBP/AUD trades at 1.6360.

New Zealand Dollar

Expected Range 1.7385 – 1.7530

Like its counterpart across the Tasman Sea, the Kiwi also hit its highest level since May 2015 against the greenback this morning rising through 75 cents to trade as high as .7558. There is little in the way of data for the rest of the week for the antipodeans so tomorrows US GDP print will likely be the event to move the local dollars. GBP/NZD is at 1.7425.

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Wait for FOMC statement finally over

25 Jul 2017
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US Dollar
Expected Range 1.2970 to 1.3070
It was another relatively quiet trading day yesterday as the summer well and took its hold with GBP/USD trading most of the day within a very tight range. There were some positive movements for sterling followi…

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Wait for FOMC statement finally over

25 Jul 2017
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US Dollar
Expected Range 1.2970 to 1.3070
It was another relatively quiet trading day yesterday as the summer well and took its hold with GBP/USD trading most of the day within a very tight range. There were some positive movements for sterling followi…

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Calm markets await FOMC statement

24 Jul 2017
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US Dollar

Expected Range 1.2970 – 1.3060

It was a very subdued start to the week yesterday with most major currency pairs trading in a narrow range. With little top tier data due today and the beginning of the holiday season its likely to be another relatively quiet session before things get going tomorrow. Mondays one print of note from the States was a slightly off-target Existing Homes Sales number with an annualised 5.52M being shown for June. Wednesday sees preliminary second quarter GDP estimates from the UK with an underwhelming 0.3% growth expected from last quarters lacklustre 0.2%. After six months of stubborn resilience after the EU membership referendum vote, 2017 has seen the UK economy finally falter in the face of rising inflation and uncertainty due to the UK’s decision to leave the bloc. Later in the day and this week’s main event for the fx markets is the latest FOMC interest rate decision and statement from the Fed. It’s all but certain rates will be kept on hold however the accompanying text may indicate that due to the recent run of poor data from America we may be on hold for the rest of the year. Expect some volatility around 7pm. GBP/USD trades at 1.3025.

Euro

Expected Range 1.1140 – 1.1215

Yesterday saw the latest set of PMI figures from the Eurozone with slight fall in most of the major surveyed sectors. German manufacturing saw a bigger than expected fall to 58.3 from last month’s stellar 59.6 which closed out the best quarter for German factories in six years. An improving picture in France was also confirmed with its manufacturing PMI coming in at 55.4, its best reading since May 2011. EUR/USD trades at 1.1650 and GBP/EUR is at 1.1180. 

Australian Dollar

Expected Range 1.6370 – 1.6480

The Aussie has kept its head above 79 cents throughout the week against the greenback and could make a play for 80 should tonight’s inflation data beat forecasts. Quarterly CPI is expected to fall slightly from 0.5% to 0.4% with the Trimmed Mean reading predicted to stay at 0.5%. GBP/AUD trades at 1.6410

New Zealand Dollar

Expected Range 1.7460 – 1.7590

In a week devoid of local data the Kiwi is range bound and will look to tonight’s Aussie inflation figures and tomorrows FOMC release for direction. NZD/USD is at .7430 and GBP/NZD is at 1.7525. 

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IMF growth downgrade adds to Trumps woes

23 Jul 2017
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US Dollar

Expected Range 1.2960 – 1.3060

There was more bad news for US President, Donald Trump over the weekend as the International Monetary Fund downgraded its 2017 growth forecast for the US economy from 2.3% to 2.1%. In its quarterly World Economic Outlook publication the fund also predicted 2.1% growth for 2018 less than the 2.5% previously penciled in as Trump struggles to push through healthcare and tax reforms in the senate. Markets reacted with much fanfare as Donald Trump promised the world when he won the presidency however he has delivered next to nothing so far to the detriment of the greenback. The UK was also in the IMFs crosshairs with a small downgrade for 2017 GDP from 2.0% to 1.7% expected. We will get an indication of the accuracy of these predictions later this week as both the UK and US publishes its first estimates of Q2 growth. The UK is expected to have seen a lacklustre 0.3% expansion for the quarter while over across the Atlantic an annualised 2.5% is expected. These two prints along with the latest FOMC statement and rate decision are the weeks highlights with little data of note before Wednesday

Euro

Expected Range 1.1130 – 1.1220

The euros rally peaked early this morning hitting with EUR/USD hitting 1.1683 before retracing as European traders arrived at their desks. The shared currency has run out of steam at similar levels against the dollar three times since last Thursday’s ECB Press Conference with stiff resistance hard to break. This morning’s monthly tranche of PMI data from the Eurozone has been a little underwhelming with both German service and manufacturing figures coming up short against expectations. GBP/EUR sits at 1.1175.

Australian Dollar

Expected Range 1.63 – 1.6450

Along with the euro, the Aussie was last week’s star performer after the RBAs latest minutes indicated the economy has turned a corner and interest rates may need to be hiked sooner than previously forecast. AUD/USD tested levels not seen since May 2015, the last time it broke through 80 cents. We currently trade at .7950 with GBP/AUD at 1.6365. We may see more gains for the local dollar if Tuesday night inflation report prints higher than 0.4% for the quarter.

New Zealand Dollar

Expected Range 1.74 – 1.7540

The Kiwi has also benefitted from dollar weakness and a risk on market on the back of the improving outlook for the Eurozone. NZD/USD is close to ten month high currently trading at .7435 with GBP/NZD at 1.75. There is little data of note from NZ this week so Australia’s inflation number and the FOMC statement are likely to be the drivers for the currency over the next five days.

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The Euro rallies following Draghis press conference

20 Jul 2017
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US Dollar
Expected Range 1.2820 to 1.3050
Yesterday’s releases from the US failed to give any further sign of the currency making headwind and clawing back any of its recent losses on what has been one of the worst weeks for the greenback.  …

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