Currency Market Trend Analysis: November 27, 2017

Ryan November 27th, 2017

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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
November 27, 2017	New Home Sales (Oct)	USA
November 28, 2017	Bank Stress Test Results	UK
November 28, 2017	BoE’s Governor Carney Speech	UK
November 28, 2017	BoC Governor Poloz Speech	Canada
November 28, 2017	Treasury Secretary Munchin Speech	USA
November 29, 2017	OPEC Meeting	USA
November 29, 2017	Mortgage Approvals (Oct)	UK
November 29, 2017	Business Climate (Nov)	EMU
November 29, 2017	CPI (Nov)	Germany
November 29, 2017	CPI/GDP (Q3)	USA
November 29, 2017	Fed’s Beige Book	USA
November 30, 2017	Unemployment Rate (Nov)	Germany
November 30, 2017	CPI (Nov)	EMU
December 1, 2017	Markit PMI’s (Nov)	All
December 1, 2017	Unemployment Rate (Nov)	Canada
December 1, 2017	ISM Manufacturing PMI (Nov)	USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

Opened last week at 0.7835 and closed at 0.7871.

The CAD appreciated against the USD by 0.46% despite another disappointing CPI release, as the greenback suffered amid political concerns. Expectations for a January rate hike have been cut further in light of recent CPI data, with many now eyeing the April BoC meeting for the next hike. Wholesale and retail sales also disappointed, with wholesale declining by 1.2% against a +0.3% expectation, and retail increasing by 0.1% against a 0.9% expectation.

Despite this disappointing data, the CAD gained ground due to rising oil prices, and a USD selloff. USD weakness was driven by tax reform concerns combined with North Korea jitters and a dovish FOMC meeting. The downside of these events is limited by the near-guarantee of a US rate hike in December. Markit PMI’s and US politics will continue to be key drivers for the CAD this week.

1. BoC Governor Poloz Speech: Monday, November 27^th

2. Markit PMI (Nov): Friday, December 1^st

3. Unemployment Rate (Nov): Friday, December 1^st

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GBP/USD - British Pound

Opened last week at 1.3213 and closed at 1.3336.

The sterling appreciated by 0.93% against the greenback last week, as the Brexit outlook lightened, and the dollar stuttered after a dovish FOMC meeting. Early in the week, Brexit concerns heightened due to fears that the German political situation would impede the EU’s ability to continue Brexit negotiations. Though the German political situation has not been resolved, Brexit fears were curtailed on the news that Tori Cabinet members will back PM May’s increased Brexit divorce bill offer (reportedly at $40bn). Further, it is rumored that the EU and UK aim to strike the divorce deal within 3 weeks. A resolution of EU citizens’’ rights post-Brexit is reportedly near, and the UK is floating the idea of a deferring negotiation on the North Ireland border with a process veto. With potential movement on all three stage 1 issues, trade negotiations might be closer than previously indicated. If these rumors pan out, expect further GBP appreciation.

1. Bank Stress Test Results: Monday, November 27^th

2. BoE’s Governor Carney Speech: Tuesday, November 28^th

3. Mortgage Approvals (Oct): Wednesday, November 29^th

4. Markit PMI (Nov): Friday, December 1^st

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EUR/USD - European Central Bank Euro

Opened last week at 1.1792 and closed at 1.1932.

Over the past week, the Euro appreciated by 1.19% against the USD, despite rising Germany political uncertainty. Following the walk out of the Free Democrats from coalition talks, Merkel met with the German President, indicating that she will not seek to form a minority government. There is a now a distinct possibility that a new election will be called. Either way – new election or minority government – will be a first in modern German history. Some believe that the Free Democrats will return to the bargaining table, and that the walk out was a move to strengthen their position and bring back up resolved issues. Like Merkel, the German public seems to prefer new elections to a minority government. The Germany political uncertainty does not seem to be causing significant harm to the Euro.

Several sources have stated that the ECB aims to postpone any substantial discussion on its next move until “well into 2018” – a disappointment for those looking for further QE guidance. Flash PMI’s came in strong, indicating that EZ growth may be re-accelerating in Q4. This weeks’ movements will be largely determined by CPI and PMI data.

1. Business Climate (Nov, EMU): Wednesday, November 29^th

2. CPI (Nov, Germany): Wednesday, November 29^th

3. Unemployment Rate (Nov, Germany): Thursday, November 30^th

4. CPI (Nov, EMU): Thursday, November 30^th

5. Markit PMI (Nov, EMU): Friday, December 1^st

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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?

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