Currency Market Trend Analysis: September 5, 2017
By The Numbers: Your FX Week In Review
|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.
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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