Currency Market Trend Analysis: January 16, 2018

Ryan January 16th, 2018

Looking For International Payments Solutions?

Get access to our free whitepaper and unlock everything you're missing.

Learn More

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 17^th, expected a CAD devaluation.

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

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

Forex Charts powered by Investing.com

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 16^th

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

Forex Charts powered by Investing.com

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 4^th. 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 18^th

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

Forex Charts powered by Investing.com

Get more Currency Market Trend Analysis >>

Sign up to get CXI's Currency Market Trend Analysis sent to your inbox weekly >>

FX Market Pro

Corporations & Financial Institutions: Want to get ahead of the curve for the upcoming week? Get CXI's currency market trend analysis sent directly to your inbox weekly.

About the Author

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

About Currency Exchange International
Currency Exchange International (CXI) is a leading provider of foreign currency exchange services in North America for financial institutions, corporations and travelers. Products and services for international travelers include access to buy and sell more than 90 foreign currencies, multi-currency cash passports, traveler's cheques and gold bullion coins and bars. For financial institutions and corporations, our services include the exchange of foreign currencies, international wire transfers, global EFT, the purchase and sale of foreign bank drafts, international traveler's cheques, and foreign cheque clearing through the use of CXI's innovative CEIFX web-based FX software www.ceifx.com

Disclaimer: All product names, logos, and brands are property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, logos, and brands does not imply endorsement.

This publication has been prepared by Currency Exchange International for informational and marketing purposes only. Opinions, estimates and projections contained herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which Currency Exchange International, its affiliates or any of their employees incur any responsibility. Neither Currency Exchange International nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction. The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434 and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a "call to action" or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. All Currency Exchange International products and services are subject to the terms of applicable agreements and local regulations. This publication and all information, opinions and conclusions contained in it are protected by copyright. This information may not be reproduced in whole or in part, or referred to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written consent of Currency Exchange International.