Tuesday, January 16, 2018

Currency Market Trend Analysis: January 16, 2018

Currency Market Trend Analysis: January 16, 2018
Source: CXI International Payments Team



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By The Numbers: Your FX Week In Review

Foreign currency value versus USD is decreasing
Foreign currency value versus USD is increasing

*Indicators show the percent change over the past week.

Currency Calendar

Date Releases / Holiday  
January 15, 2018 Trade Balance (Nov) EMU
January 16, 2018 CPI (Dec) Germany
January 16, 2018 PPI/CPI (Dec) UK
January 17, 2018 CPI (Dec) EMU
January 17, 2018 BoC Monetary Policy Report Canada
January 17, 2018 BoC Interest Rate Decision Canada
January 17, 2018 Fed’s Beige Book Report USA
January 17, 2018 FOMC Member Mester Speech USA
January 18, 2018 German Buba President Weidmann Speech Germany
January 18, 2018 Housing Starts Change (Dec) USA
January 18, 2018 Continuing Jobless Claims USA
January 18, 2018 Philadelphia Fed Manufacturing Survey (Jan) USA
January 19, 2018 Producer Price Index (Dec) Germany
January 19, 2018 Retail sales (Dec) UK
January 19, 2018 Baker Hughes US Oil Rig Count USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

CAD/USD opened last week at 0.8063 and closed at 0.8029 – depreciating by 0.42% as concerns over the US pulling out of NAFTA escalated.

The CAD was supported this past week by a strong jobs reports; hourly earnings jumped 2.9%, and 78.6k jobs were created against an expectation of 2k. As a result, markets are now pricing in a greater than 2/3 chance of a rate hike at the January BoC meeting.

NAFTA-related concerns escalated this week, after Canada announced that they are taking the US to the WTO in response to “unfair and unwarranted” U.S. Duties against Canada’s softwood lumber. The Canadian government is increasingly unsure that the US will stay in NAFTA, and is preparing for multiple scenarios. Markets reacted to increasing uncertainty by selling off the CAD and MXN. 

A greater than 2/3 chance of a Jan BoC rate hike may be over-zealous, considering NAFTA-driven uncertainty. If the BoC does not hike rates on the 17th, expected a CAD devaluation. 


1. BoC Monetary Policy Report: Monday, January 17th   

2. BoC Interest Rate Decision: Monday, January 17th    


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GBP/USD - British Pound

GBP/USD opened last week at 1.3567 and closed at 1.3727 – appreciating by 1.18% after a Bloomberg report claimed that China may pause its US govt. bond purchases.

The Sterling fell early in the week upon news that PM May will appoint a ‘No deal’ Brexit Cabinet Minister, to prepare for the possibility of leaving the EU without a trade deal. Further depreciation was driven by reports that the UK’s largest construction and services company, Carillion, went into liquidity. Subsequent losses were reversed upon news that China may end its US govt. bond purchase program – triggering a broad-based USD selloff.

This week’s movements will be data-driven, with special attention paid to the PPI/CPI. As of the last measurement, UK inflation exceeded the acceptable bound of 2% +/- 1%. This is of increased importance due to the UK’s ongoing struggle with negative wage growth. 


1. PPI/CPI (Dec): Monday, January 16th    

2. Retail Sales (Dec): Friday, January 19th


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EUR/USD - European Central Bank Euro

EUR/USD opened last week at 1.2029 and closed at 1.2201 – appreciating by 1.43% as eurozone (EZ) data continues to come in strong, and USD was sold off on rumors of China ending its US bond purchase program.

EZ found support from a variety of data releases this past week; employment rose 0.4% in Q3, consumer confidence hit its highest level since Jan 2001, and the manufacturing PMI for Dec hit the highest level since data collection began in 1997. Additionally, French manufacturing output fell 1.0%, against an expected decreased of 1.4%, and Germany’s budget surplus came in better-than-expected at 1.2% of GDP.

The common currency also found support through lowered political uncertainty. German domestic party sources have reported that German party leaders have reached a breakthrough in coalition talks. Italian elections will take place on March 4th. It is currently predicted that there will be no majority winner, but it is unlikely that an anti-EU coalition will emerge. 


1. Trade Balance (Nov, EMU): Monday, January 15th      

2. CPI (Dec, Germany): Monday, January 15th      

3. German Buba President Weidmann Speech (Jan, Germany): Thursday, January 18th    

4. Producer Price Index (Dec, Germany): Friday, January 19th       


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About the Author

Collin McAliley

 Collin McAliley - Business Operations Analyst,

Collin educates corporate clients on foreign currency markets lending industry best practices that enhance client knowledge and create specialized solutions that fit each business. Interested in having a custom international payments strategy or foreign exchange risk plan? Request A Call

Written with assistance from Christopher Griffith - Junior Data Analyst


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Posted By Rachel Butler at 11:13 AM
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