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Monday, November 6, 2017

Currency Market Trend Analysis: November 6, 2017

Currency Market Trend Analysis: November 6, 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  
November 6, 2017 Markit PMI’s (Oct) EMU
November 6, 2017 PPI (Oct) EMU
November 6, 2017 Eurogroup meeting EMU
November 6, 2017 Ivey Purchasing Managers Index (Oct) Canada
November 7, 2017 BoC Governor Poloz Speech Canada
November 7, 2017 NIESR GDP Estimate (Oct) UK
November 7, 2017 Consumer Credit Change (Sep) USA
November 8, 2017 Non-Monetary Policy’s ECB Meeting EMU
November 9, 2017 RICS Housing Price Balance (Oct) UK
November 9, 2017 Imports/Exports (Sep) Germany
November 9, 2017 Economic Bulletin EMU
November 9, 2017 Jobless Claims USA
November 10, 2017 Industrial/Manufacturing Production (Sep) UK

Upcoming bank holidays and impactful report releases for select countries.

Market Analysis

CAD/USD - Canadian Dollar

Opened last week at 0.7809 and closed at 0.7838.

The CAD appreciated by 0.38% against the USD, as US labor market data disappointed, and Canadian employment rose above expectations. The CAD’s move up at the week’s end was further supported by rising crude prices, a boon for the commodity-sensitive Loonie. The up-tick created by Canadian labor data was muted by disappointing GDP growth (expectation of 0.1% MoM) and a pull-back in retail sales (+0.3% vs +0.5% expectation).

Politics and Poloz’s speech will likely be the main drivers of CAD/USD movement in this data-light week. The CAD is currently vulnerable to more middling data, after the permits, CPI, retails sales, Aug GDP, and BoC outlook surveys all came back below expectations. With this in mind, markets may pay elevated attention to the Ivey Purchasing Managers Index due on the 6th. Further developments with the US Russia-gate may create further upside for the CAD.       

1. Ivey Purchasing Managers Index (Oct): Monday, November 6th     

2. BoC Governor Poloz Speech: Tuesday, November 7th     

 

GBP/USD - British Pound

Opened last week at 1.3129 and closed at 1.3078.

The sterling depreciated by 0.39% against the greenback last week, in response to a dovish BoE meeting in which an interest rate hike was passed 7 to 2.  BoE Governor Carney stated that “Brexit may limit central bank's ability to cut interest rates and add to the risks of slower UK economic growth in case there is no Brexit deal”. The BoE’s new statement made no mention of further hikes in coming months, and removed a line from their previous statement saying that policy could be tightened more than the market expects. The BoE indicated that economic growth cannot exceed 1.5% without rising inflation, due to limited slack in the labor market and slowing productivity growth. The BoE also stated that there will likely be two rates hikes in the next three years, further dampening GBP outlook.

The next round of Brexit negotiation is set to begin on Thursday the 9th. Brexit Secretary Davis confirmed last week that negotiations would restart, and that the financial settlement is likely to favor the EU. The Brexit outlook has improved since May’s Florence speech, but there are still numerous points of contention. Markets will be paying close attention to this weeks’ Brexit talks, with further market movement driven by the NIESR GDP estimate and the industrial/manufacturing production figures. Further depreciation is likely, unless these figures surprise to the upside.  

1. NIESR GDP Estimate (Oct): Tuesday, November 7th

2. RICS Housing Price Balance (Oct): Wednesday, November 8th

3. Industrial/Manufacturing Production (Sep): Friday, November 10th

 

EUR/USD - European Central Bank Euro

Opened last week at 1.1609 and closed at 1.1613.

Over the past week, the Euro appreciated by 0.03% against the USD, as data surprised to both sides, and the USD took a politics-driven hit. Eurozone service indices fell in October, but still reflect solid economic performance. Germany service PMI missed estimates (54.7 vs. 55.), while Eurozone estimates slightly exceeded expectations (56 vs 59.9). Eurozone economic sentiment and business climate figures both surprised to the upside, but were balanced by lower-than-expected core CPI (1.2% YoY vs 1.3%). Despite the Catalan crisis, Spain’s GDP rose 0.8% QoQ, meeting market estimates. Spain has cut their outlook for YoY GDP growth from 2.6% to 2.3% in light of Catalan-driven economic disturbances.

This week will see several key economic figures and events, including PMI’s, PPI, imports/exports, and the beginning of the next round of Brexit talks. This data will drive the weeks’ movements. 

1. Markit PMI’s (Oct, EMU): Monday, November 6th       

2. PPI (Oct, EMU): Monday, November 6th      

3. Eurogroup Meeting: Monday, November 6th      

4. Non-Monetary Policy’s ECB Meeting: Wednesday, November 8th

5. Imports/exports (Sep, Germany): Thursday, November 9th         

6. Economic Bulletin (EMU): Thursday, November 9th              

 

Charts: TradingView

 

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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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