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Monday, August 21, 2017

Currency Market Trend Analysis: August 22, 2017

Currency Market Trend Analysis: August 22, 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 22, 2017 Public Sector Net Borrowing (Jul) UK
August 22, 2017 ZEW Survey - Current Situation/Economic Sentiment (Aug) Germany
August 22, 2017 ZEW Survey - Current Situation/Economic Sentiment (Aug) EMU
August 22, 2017 Retail Sales (Jun) Canada
August 22, 2017 Housing Price Index (Jun) USA
August 23, 2017 Markit PMI Composite (Aug) Germany
August 23, 2017 Markit PMI Composite (Aug) EMU
August 23, 2017 FOMC Member Kaplan Speech USA
August 23, 2017 Markit Manufacturing PMI (Aug) USA
August 23, 2017 ECB President Draghi's Speech EMU
August 24, 2017 Jackson Hole Symposium USA
August 24, 2017 GDP (Q2) UK
August 25, 2017 GDP (Q2) Germany
August 25, 2017 Fed's Yellen Speech USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

Opened last week at 0.7890 and closed at 0.7948. 

The CAD rose 0.74% against the USD last week, despite falling oil prices and lower-than-expected Canadian manufacturing sales. This news was balanced by Friday’s CPI data, which increased the likelihood of another rate hike come Autumn. Strong US retail sales figures were a boon to the USD, but positive sentiment has been blunted continued political turmoil within the Trump administration. Markets are progressively losing faith in the Trump administration’s promises of meaningful US fiscal policy reform. I am neutral on CAD/USD for the coming week. It will be a quiet week for the CAD data-wise, and it still seems to be consolidating previous gains. 

 

1. Retail Sales (Jun): Tuesday, August 22.

 

 

GBP/USD - British Pound

Opened last week at 1.3010 and closed at 1.2845. 

The GBP depreciated 1.27% versus USD last week, after mixed data reduced market expectations for a BoE rate hike. UK wage growth beat expectations (estimated at 2.1%), but is still exceeded by inflation, with real income down 0.5% for the year. Brexit continues to weigh on the GBP, with markets fearing that the UK’s focus on a strong Brexit will delay phase 2 of negotiations until December. The UK released plans for continued trade in goods and services post-Brexit, but the EU has made it clear that trade issues will not be discussed until other issues, including citizens’ rights, are addressed. I am bearish on the GBP/USD in the short-term. UK data has not impressed lately, and Brexit-related concerns are not going anywhere soon. 

 

1. Public Sector Net Borrowing (Jul): Tuesday, August 22.

2. GDP (Q2): Thursday, August 24.

 

 

EUR/USD - European Union Euro

Opened last week at 1.1824 and closed at 1.1747.

Over the past week, the Euro depreciated by 0.65% against the USD, despite political turmoil weighing on the Dollar Index. The Jackson Hole Symposium will hold much of the markets’ attention this week; ECB President Draghi is expected to avoid forward guidance during this meeting. Increasing EUR momentum could threaten inflation, and increase the time horizon for QE tapering. By measures of purchasing power parity, the EUR is undervalued against the USD. A slow and steady appreciation is ideal for the EUR right now, and requires careful consideration towards market sentiment. I am bullish on the Euro in the long term, but neutral for this coming week. 

 

1. ZEW Survey - Current Situation/Economic Situation (EMU & Germany, Aug): Tuesday, August 22.

2. Markit PMI Composite (EMU & Germany, Aug): Wednesday, August 23.

3. ECB President Draghi's Speech (EMU, Jul): Wednesday, August 23.

4. GDP (Germany, Q2)Friday, August 25.

 


 

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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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