Currency Market Trend Analysis: November 13, 2017
By The Numbers: Your FX Week In Review
|Date||Releases / Holiday|
|November 13, 2017||Remembrance Day||Canada|
|November 13, 2017||FOMC Member Harker Speech||USA|
|November 14, 2017||Harmonized Index of Consumer Prices (Oct)||Germany|
|November 14, 2017||Price Indexes (Oct)||UK|
|November 14, 2017||Fed’s Yellen Speech||USA|
|November 14, 2017||BoE’s Governor Carney Speech||UK|
|November 14, 2017||GDP (Q3)||EMU|
|November 14, 2017||ECB’s President Draghi’s Speech||EMU|
|November 15, 2017||Retail Sales (Oct)||USA|
|November 15, 2017||CPI (Oct)||USA|
|November 16, 2017||CPI (Oct)||EMU|
|November 16, 2017||BoE’s Governor Carney Speech||UK|
|November 16, 2017||BoC Review||Canada|
|November 17, 2017||ECB President Draghi’s Speech||EMU|
|November 17, 2017||CPI (Oct)||Canada|
Upcoming bank holidays and impactful report releases for select countries.
CAD/USD - Canadian Dollar
Opened last week at 0.7838 and closed at 0.7870.
The CAD appreciated by 0.41% against the USD, as the Canadian Ivey Purchasing Managers Index surprised to the upside, crude rallied, and US tax reform suffered a setback. The Loonie suffered early in the week as crude fell, but rebounded after the Nigerian oil minister stated that Nigeria would support an extension of a deal to cut oil supply until the end of 2018. Further support was found in the Ivey Purchasing Managers Index, which rose from 59.6 to 63.8. US tax reform also contributed to Loonie appreciation, with the announcement that US corporate tax cuts will be delayed until 2019.
BoC Governor Poloz stated this past week that the bank will proceed cautiously on future rate hikes. Markets currently expect the next rate hike to occur in January, with an additional hike to follow in 2018. Overall, Canadian data has been softening, but this may be payback from a very strong Q2 and Q3. This will be relatively quiet week data-wise for the CAD, with fallout from the US tax reform announcement and the Canadian CPI acting as the main drivers. Sideways trading is likely.
- Remembrance Day (Oct): Monday, November 13th
- BoC Review: Thursday, November 16th
- CPI (Oct): Friday, November 17th
GBP/USD - British Pound
Opened last week at 1.3078 and closed at 1.3093.
The sterling appreciated by 0.12% against the greenback last week, riding US weakness driven by tax reform delays. Politics continues to weigh on the Sterling, with renewed attacks on May’s leadership. International Development Secretary Patel resigned amid controversy involving unauthorized meetings with senior Israeli politicians. Subsequently, 40 members of the Tori party signed a no-confidence letter in May - 8 votes shy of the # needed to replace her. This does not bode well for the already beleaguered Brexit negotiations, with public confidence in May’s ability to strike a Brexit deal hitting a new low.
There are three rounds of Brexit negotiations left before Decembers’ EU summit, in which EU leaders will decide if sufficient progress has been made to move on to the next phase of Brexit negotiations. To pass this check, the significant progress must be made on the issues of the N. Ireland border, divorce settlements, and rights of EU citizens. An agreement on the methodology for calculating the UK’s liability would go a long way towards expediting negotiations.
UK data continues to offer little incentive for the Sterling. UK economy is predicted to grow by 1.3% in 2018, down from 1.8% in 2017, assuming that the EU trade relationship remains unchanged. The 3-year market-implied BoE policy rates currently sits at 1.00%. If the UK price indexes come in above expectation, we could see some slight appreciation driven by improved rate hike expectations. Otherwise, politics will likely be the main driver of GBP movements.
- Price Indexes (Oct): Tuesday, November 14th
- BoE’s Governor Carney Speech: Tuesday, November 14th
- BoE’s Governor Carney Speech: Thursday, November 16th
EUR/USD - European Central Bank Euro
Opened last week at 1.1613 and closed at 1.1659.
Over the past week, the Euro appreciated by 0.40% against the USD, as data continues to come in strong, and US tax reform suffered a setback. German and French production figures were solid, and the Eurozone service PMI rose from 54.9 to 50.0, while Spanish service PMI fell to 54.6 from 56.7 due to Catalonia-driven uncertainty. ECB Executive Board Member Praet stated this past week that inflationary risks have disappeared, and some measures of underlying inflation have improved. This weeks’ movements will be driven by European GDP and CPI figures, with slight appreciation likely.
- Harmonized Index of Consumer Prices (Oct, Germany): Tuesday, November 14th
- GDP (Q3, EMU): Tuesday, November 14th
- ECB’s President Draghi’s Speech: Tuesday, November 14th
- CPI (Oct): Thursday, November 16th
- ECB’s President Draghi’s Speech: Friday, November 17th
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