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Monday, August 7, 2017

Currency Market Trend Analysis: August 7, 2017

Currency Market Trend Analysis: August 7, 2017
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 Entity
August 7, 2017 Labor Market Conditions Index (Jul) USA
August 7, 2017 FOMC Member Kashkari Speech USA
August 7, 2017 Consumer Credit Change (Jun) USA
August 8, 2017 OPEC Meeting OPEC
August 8, 2017 Current Account (Jun) Germany
August 8, 2017 Exports/Imports (Jun) Germany
August 9, 2017 Inflation Report Hearings UK
August 9, 2017 Housing Starts (Jul) Canada
August 10, 2017 Production Reports (Jun) UK
August 10, 2017 Monthly Budget Statement (Jul) USA
August 11, 2017 CPI (Jul) France
August 11, 2017 CPI (Jul) USA
August 11, 2017 FOMC Member Kashkari Speech USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

The CAD opened last week at 0.8043 and closed at 0.7922. 

The CAD fell 1.50% against the USD last week, reversing much of the preceding weeks’ gains. This shift was driven by relatively poor Canadian employment figures (10.9k jobs added vs. 13.1k) and higher-than-expected US NFPs (209k vs. 183k). A reduction in the US trade deficit to $43.6 billion, and softening oil prices also factored in. USD shorts are still increasing, as are CAD longs. 

I am neutral on the CAD/USD over the next week. The recent CAD/USD breakdown may have been, in-part, a correction for previous CAD overbuying; much of the USD’s recent losses have been driven by factors that are still in play. Internal political turmoil, and a failure to pass healthcare reform have eroded confidence that the current administration will pass tax reform. Compared to last year, the USD fundamentals have also worsened, decreasing the likelihood of a USD rate hike before the years’ end. Unless further positive US economic data follows the NFPs, the recent CAD/USD losses may not hold. 

 

1. Housing Starts (Jul): Wednesday, August 9.

 

 

GBP/USD - British Pound

The GBP opened last week at 1.3133 and closed at 1.3034.

The GBP depreciated 0.75% against the USD over the past week, in response to strong US jobs reports, and a less hawkish outlook from the BoE. Last Thursday, only 2 members of the BoE voted for a rate rise, one less than the previous vote. USD short are still increasing; the USD may still be in overbought territory. Without any better-than-expected economic data, I expect the GBP to trade sideways, or depreciate marginally against the USD. This weeks’ exchange movement will likely be slow for the first half of the week, picking up with the release of UK production reports, and US CPI data. 

 

1. Inflation Report Hearings: Wednesday, August 9.

2. Production Reports (Jun): Thursday, August 10.

 

 

EUR/USD - European Union Euro

The Euro opened last week at 1.1752 and closed at 1.1753.

Over the past week, the Euro traded sideways, appreciating by 0.01% against the USD. Last week saw few breaks from Eurozone data expectations, though German production data did soften. The Euro traded up throughout last week, but these gains consolidated in response to strong US employment and NFP data. The EUR is likely to resume its appreciation, subject to positive US economic data upstarts. The underlying factors that have cause EUR appreciation against the USD are still active. 

 

1. Current Account (Germany, Jun): Tuesday, August 8.

2. Exports/Imports (Germany, Jun): Tuesday, August 8.

3. CPI (France, Jul)Friday, August 11.

 


 

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About the Author

Collin McAliley

 Collin McAliley - Financial 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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