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Tuesday, September 5, 2017

Currency Market Trend Analysis: September 5, 2017

Currency Market Trend Analysis: September 5, 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
September 5, 2017 Markit PMI Composite (Aug) EMU
September 5, 2017 FOMC Member Brainard Speech USA
September 5, 2017 FOMC Member Kashkari Speech USA
September 5, 2017 FOMC Member Kaplan Speech USA
September 6, 2017 Trade Balance (Jul) USA
September 6, 2017 BoC Rate Statement Canada
September 6, 2017 Fed’s Beige Book USA
September 7, 2017 GDP (Q2) EMU
September 7, 2017 Interest Rate Decision EMU
September 7, 2017 ECB Monetary Policy Statement and Press Conference EMU
September 7, 2017 Ivey Purchasing Managers Index (Aug) Canada
September 7, 2017 FED’s William Dudley Speech USA
September 8, 2017 Consumer Inflation Expectations UK
September 8, 2017 Industrial/Manufacturing Production (Jul) UK
September 8, 2017 Unemployment Rate (Aug) Canada
September 8, 2017 Net Change in Employment (Aug)  Canada
September 8, 2017 FOMC Member Harker Speech USA

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

Opened last week at 0.8014 and closed at 0.8082.

The CAD rose 0.85% against the USD last week, amid rising oil prices and a Canadian Q2 GDP print of 4.5%. Canadian economic data continues to come in positive, and labor and housing market projections indicate that inflation will continue to build. Due to these factors, the market is currently pricing in a 50% probability of a rate hike at this Wednesday’s BoC policy meeting. If the BoC does not raise rates this Wednesday, the CAD will likely take a hit; any depreciation stemming from this scenario will likely be reined in by the expectation of an October rate hike. If the BoC does indeed hike rates this Wednesday, further appreciation against the USD is likely. Data and market trends are bullish on the CAD/USD currently. Canadian data continues to impress, and inflationary pressures are supporting a quickening of the BoC rate hike schedule. 

 

1. BoC Rate Statement: Wednesday, September 6.

2. Ivey Purchasing Managers Index (Aug): Thursday, September 7.

3. Unemployment Rate (Aug): Friday, September 8.

4. Net Change in Employment (Aug): Friday, September 8.

 

 

GBP/USD - British Pound

Opened last week at 1.2883 and closed at 1.2972.

The sterling appreciated 0.69% against the greenback last week, despite continued Brexit worries. These gains came off of continued US weakness, exacerbated by rising tensions with North Korea.  European Commission President Jean-Claude Juncker stated this week “I’ve read all the position papers produced by Her Majesty’s government and none of them is satisfactory… There is still an enormous amount of issues that remain to be settled…”. These comments come ahead of the October European Council, in which it will be decided if sufficient progress has been made for Brexit trade negotiations to start. Despite mounting indicators that Brexit is behind schedule, UK business confidence was at a three-month high last week – though still subdued compared to pre-Brexit levels. Markets are pessimistic about the Pound, and without a turn in the data, or some major improvements in the Brexit negotiations, this trend is likely to continue. The GBP may appreciated against the USD this past week, but a reversal is likely. 

 

1. Consumer Inflation Expectations: Friday, September 8.

2. Industrial/Manufacturing Production (Jul): Friday, September 8.

 

 

EUR/USD - European Central Bank Euro

Opened last week at 1.1925 and closed at 1.1879.

Over the past week, the Euro depreciated by 0.39% against the USD, as August PMI figures disappoint. The Euro held gains for much of last week, following weak US personal income figures, but lost these gains as Spanish, Italian, and French data came up short. Markets are beginning to price in a more delayed slow-down of ECB QE, potentially beyond December. It is important to note that the expectation of QE tapering initiating in December is based upon a rumor. On this topic, ECB Governing Council member Ewald Nowotny stated that “as long as we have low inflation I do not see a perspective for higher interest rates”. Though recent European data disappointed, the underlying factors that have been strengthening the common currency are still in play. The Euro is likely to continue to appreciate against the USD, though at a reduced speed.

 

1. Markit PMI Compostite (EMU, Aug): Tuesday, September 5.

2. GDP (EMU, Q2): Thursday, September 7.

3. Interest Rate Decision (EMU): Thursday, September 7.

4. ECB Monetary Policy Statement and Press Conference (EMU): Thursday, September 7. 

 


 

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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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