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Wednesday, August 30, 2017

Currency Market Trend Analysis: August 30, 2017

Currency Market Trend Analysis: August 30, 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 28, 2017 Bank Holiday UK
August 28, 2017 Dallas Fed Manufacturing Business Index (Aug) USA
August 29, 2017 Gfk Consumer Confidence Survey (Sep) Germany
August 29, 2017 S&P/Case-Shiller Home Price Indices (Jun) USA
August 30, 2017 Consumer Credit (Jul) UK
August 30, 2017 Services and Economic Sentiment Indicators (Aug) EMU
August 30, 2017 GDP (Q2) USA
August 30, 2017 Core Personal Consumption Expenditures (Q2) USA
August 30, 2017 Current Account (Q2) Canada
August 30, 2017 Gfk Consumer Confidence (Aug) UK
August 31, 2017 Retail Sales (Jul) Germany
August 31, 2017 Unemployment Rate (Aug) EMU
August 31, 2017 CPI (Aug) EMU
August 31, 2017 Core Personal Consumer Expenditures (Jul) USA
August 31, 2017 GDP (Q2) Canada
September 1, 2017 Markit Manufacturing PMI (Aug) USA, UK, EMU
September 1, 2017 Nonfarm Payrolls (Aug) USA
September 1, 2017 ISM Manufacturing PMI (Aug) USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

Opened last week at 0.7949 and closed at 0.8003. 

The CAD rose 0.68% against the USD last week, following a small increase in Canadian core inflation data. The prevailing sentiment following this data, is that the BoC will increase rates in October. The CAD was also supported by increasing 10-year yields, topping out at 1.94%. These positive indicators were weighed down by falling oil prices, a liability to the commodity-sensitive CAD, as well as a widened current account deficit of $16.3 billion. Trump’s negative sentiment towards NAFTA continues to create political uncertainty for the CAD/USD. Markets are more confident that the BoC will raise rates than any other major central bank this year - barring a major upset relating to NAFTA renegotiation, the data suggests that the CAD will continue to strengthen against the USD in the short term. GDP figures will be the main catalyst for CAD/USD movements this week.   

 

1. Gfk Consumer Confidence Survey (Germany, Sep): Tuesday, August 29.    

2. Services and economic sentiment indicators (EMU, Aug): Wednesday, August 23.

3. Retail sales (Germany, Jul): Thursday, August 31.

4. Unemployment rate (Germany & EMU, Aug): Thursday, August 31.

5. CPI (EMU, Aug): Thursday, August 31.

6. Markit manufacturing PMI (Germany & EMU, Aug): Friday, September 1.

 

GBP/USD - British Pound

Opened last week at 1.2873 and closed at 1.2875. 

The sterling appreciated 0.01% against the greenback last week, as politics weighed on both sides.  The UK released a position paper stating that longstanding trading relationships for goods are beneficial to both the UK and EU, and that businesses and consumers must be the strongest consideration in Brexit negotiations. Though a positive sentiment, the statement does not address worries regarding the timeline of Brexit, and the possibility of a breakdown of negotiations. Proposals to retain a customs union for a transitionary period post-Brexit have been met with mixed reception. The past weeks’ UK data came in according to expectations, with 0.3% q/q GDP growth, providing little drive for rate movement. The pair is likely to trade sideways in the short-term, with political pressure continuing on both sides. 

 

1. Bank Holiday: Monday, August 28.

2. Consumer credit (Jul): Wednesday, August 30.

3. Mortgage approvals (Jul): Wednesday, August 30.

4. Gfk Consumer Confidence (Aug): Wednesday, August 30.

5. Markit manufacturing PMI (Aug): Friday, September 1.

 

 

EUR/USD - European Central Bank Euro

Opened last week at 1.1764 and closed at 1.1874.

Over the past week, the Euro appreciated by 0.93% against the USD, with European economic growth holding steady, and political risk fading. The ECB discussion on tapering has been moved to October 26th, with ECB President Draghi emphasizing the need for patience and prudence in response to weakened inflationary pressure. Despite Draghi’s continued cautionary comments, market expectations for EMU tapering have been steadily increasing. At the Jackson Hole Symposium Draghi warned against the risks of trade protectionism in regards to productivity and growth for the world economy – likely in response to growing US and UK anti-trade rhetoric. Strong growth continues to support the EUR. With underlying strengths holding steady, indicators are bullish for the common currency.

 

1. Gfk Consumer Confidence Survey (Germany, Sep): Tuesday, August 29.

2. Services and economic sentiment indicators (EMU, Aug): Wednesday, August 23.

3. Business climate (EMU, Aug): Wednesday, August 23.

4. Retail sales (Germany, Jul): Thursday, August 31.

5. Unemployment rate (Germany & EMU, Aug): Thursday, August 31.

6. CPI (EMU, Aug): Thursday, August 31.

7. Markit manufacturing PMI (Germany & EMU, Aug): Friday, September 1.

 


 

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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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