Global Currencies Update

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Re: Global Currencies Update

Postby voight » Wed Jun 14, 2017 10:31 am

Pound Rallies as UK Inflation Hits Four-Year High
Oliver Meredew

Pound Sterling (GBP)


The Pound has risen by over 0.3% against the US Dollar and Euro today, following the news that UK inflation is at its highest level in four years.

The annual inflation rate rose from 2.7% to 2.9% in May, putting further pressure on UK wages. This was evidenced by another historic figure – UK real incomes were falling at the fastest rate in three years.

The Pound remained in demand despite the negative implications, possibly because a solid deal between the Conservatives and Democratic Unionist Party (DUP) may soon be announced.

Asides from any political news, the Pound could slump when Wednesday’s UK wage growth figures come out. If average earnings post under 2.9%, the current wage squeeze will persist, which could greatly weaken trader confidence in the UK economy.

Euro (EUR)

Following mixed Eurozone confidence scores, the Euro has dipped against the Pound but made minor gains against the US Dollar.

The ZEW confidence scores for June showed a rise in the Eurozone economic sentiment index, as well as the German current conditions index. Conversely, the German economic sentiment index fell instead of rising as forecast.

The Euro may make similarly uncertain movements on Wednesday, when Eurozone production and employment figures come out.

Forecasts are for a rise in monthly production but an annual drop, while in Q1 the level of employment is expected to rise by 3%.


US Dollar (USD)

In a déjà vu moment from last week, US Dollar traders are once again on edge about impending Congressional testimony.

This tension has lowered demand in the US Dollar, bringing USD EUR and USD GBP losses. Today’s testimony will come from Attorney General Jeff Sessions, who will be discussing his previous contact with Russia officials.

If Sessions’ comments imply trouble ahead for the Trump administration, then the US Dollar may slide in demand.
Australian Dollar (AUD)

Today has brought minor Australian Dollar losses against the Pound, Euro and US Dollar. This weakness comes after a drop in the NAB business confidence score for May.

The Australian Dollar’s losses may expand in the near-term on additional confidence figures on Wednesday. These will come from Westpac bank and previously showed a -1.1% drop in the consumer confidence change.

New Zealand Dollar (NZD)

The New Zealand Dollar has risen against the Euro and US Dollar today, but has seen losses against the Pound.

This mixed performance comes from NZ Institute of Economic Research (NZIER) forecasts for the next three years. The organisation predicts that economic growth will slow from 3.3% in 2017 to 2.7% by 2020, coupled with a slowdown in household spending.

The New Zealand Dollar could shake off these concerning forecasts on Wednesday, when GDP growth rate stats for Q1 are due. If quarterly and annual GDP rises significantly then major NZD appreciation could be triggered.

Canadian Dollar (CAD)

Crude oil prices have continued to rise slowly but steadily today, enabling Canadian Dollar to Euro and US Dollar rises. The CAD GBP exchange rate has dipped, owing to currently high demand for Sterling.

The latest positive influence has been Bank of Canada (BOC) Senior Deputy Governor Carolyn Wilkins.

Wilkins has stated that the economy is recovery across a range of areas, which has led some to speculate that there will be an incoming BOC interest rate hike.

Before such an announcement, Thursday will bring CA new vehicle and manufacturing sales figures. Manufacturing sales are forecast to rise by 0.7%; such an outcome may firm Canadian Dollar demand.
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Re: Global Currencies Update

Postby voight » Sat Jun 17, 2017 4:12 pm

Sterling DIVES ahead of next week’s formal Brexit talks

pound-to-euro-978898.jpg


The pound to euro exchange rate has fallen again as the UK prepares for formal Brexit negotiations next week.

The negotiations will begin on Monday and the pound had dropped from €1.14654 overnight to €1.14293 today (at the time of writing).

Sterling has slowly risen against the euro this week after reaching a low of €1.12821 on Monday.

Speaking to the Daily Star Online, Caxton FX Analysis, Alexandra Russell-Oliver, said: “Sterling has eased back against the euro this morning, correcting from yesterday’s rally after the MPC’s decision to keep interest rates on hold was unexpectedly close.

“Sterling will remain vulnerable to political risk as the UK undertakes formal Brexit negotiations with EU officials from Monday and the Conservative Party looks to ally with the DUP. The longer uncertainty lasts, the greater the risk for the pound.

“In the medium term, speculation of a softer Brexit could support the pound.”

The drop comes after the pound soared against the euro yesterday as the BoE’s Monetary Policy Meeting kicked off.

Just after midday yesterday, the exchange rate went from €1.3702 to €1.14612 to the pound.

Sterling rose by around 0.73% as the BoE left interest rates on hold in shock 5-3 split.

Three BoE policymakers – Michael Saunders, Ian McCafferty and Kristin Forbes – voted to increase the cost of borrowing.

This also caused a rise in the pound to dollar exchange rate – something that has also hit a low after last week’s shock general election result.
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Re: Global Currencies Update

Postby voight » Sun Jun 18, 2017 11:16 am

Weekly Forex snap against LKR- 17/06/2017

curr.17.06.png


Image

- Last weeks gains were short lived as LKR depreciated this week against major currencies. USD is still holding up for this quarter and itl be interesting to see how long can USD can be in this level as we are about to approach second half of the year.

- GBP is expected to be volatile in the next few months as britain will be starting brexit negotiations this week.
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Re: Global Currencies Update

Postby NC+ » Sun Jun 18, 2017 12:22 pm

Thanks Voight.. :)
Can we expect drop of JPY ..?
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Re: Global Currencies Update

Postby voight » Sun Jun 18, 2017 12:53 pm

Il be expecting this to go up because BOJ decided to keep interest at negative 0.1% 2 days ago . We can say smothing definite when US Fed and BOJ make their next review hopefully.
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Re: Global Currencies Update

Postby NC+ » Mon Jun 19, 2017 6:53 am

voight wrote:Il be expecting this to go up because BOJ decided to keep interest at negative 0.1% 2 days ago . We can say smothing definite when US Fed and BOJ make their next review hopefully.

If BOJ decided to kept negative rates, I think we can expect a drop of JPY.. :-?
Meanwhile our rates decision at next Monday..
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Re: Global Currencies Update

Postby voight » Mon Jun 19, 2017 11:18 am

NC+ wrote:
voight wrote:Il be expecting this to go up because BOJ decided to keep interest at negative 0.1% 2 days ago . We can say smothing definite when US Fed and BOJ make their next review hopefully.

If BOJ decided to kept negative rates, I think we can expect a drop of JPY.. :-?
Meanwhile our rates decision at next Monday..


I think so too if current conditions remain exactly the same. But I cant say anything for definite considering where LKR will end up in coming months. :-??
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Re: Global Currencies Update

Postby NC+ » Mon Jun 19, 2017 11:22 am

Hahaa no one can say anything exactly, lets wait & watch..
I like if JPY down, & u know the reason.. ;) ;))
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Re: Global Currencies Update

Postby voight » Mon Jun 19, 2017 11:25 am

NC+ wrote:Hahaa no one can say anything exactly, lets wait & watch..
I like if JPY down, & u know the reason.. ;) ;))


What if some relief for Car Buyers on this years budget and a drop in JPY by that time :ymdaydream:

:D
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Re: Global Currencies Update

Postby NC+ » Tue Jun 20, 2017 5:28 pm

US interest rate hikes: How should Asia respond?
http://www.dailymirror.lk/article/US-in ... 31208.html
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Re: Global Currencies Update

Postby voight » Thu Jun 22, 2017 1:16 am

Global stocks fall as supply worry hits oil; U.S. dollar climbs

s2.reutersmedia.net.jpg


World stock markets fell on Tuesday as a drop in oil prices weighed on the energy sector, while hawkish comments from several U.S. Federal Reserve officials pushed the U.S. dollar to a one-month high.

After the market close, index provider MSCI said it will add mainland Chinese 'A' stocks to its widely followed Emerging Markets Index in a landmark decision for the global investment landscape.

Oil fell about 2 percent, with Brent settling at seven-month lows and U.S. crude at its cheapest since September, after increased supply from several key producers overshadowed high compliance by OPEC and non-OPEC oil producers with a deal to cut global output.

That slide weighed down energy stocks on Wall Street and in Europe. The S&P energy index dropped 1.3 percent as the worst-performing of the 11 major S&P sectors and Europe's oil and gas sector slumped 2.2 percent.

"People really thought $45 to $55 was kind of the range of oil, but it is getting weaker and weaker and U.S. producers are getting more and more efficient," said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York

"So if that is the case, they are going to keep pumping."

U.S. crude settled down 2.2 percent at $43.23 per barrel and Brent settled 1.9 percent lower at $46.02.

The drop put U.S. crude in a bear market, traditionally defined as a drop of more than 20 percent from a recent high.

The Dow Jones Industrial Average fell 61.85 points, or 0.29 percent, to 21,467.14, the S&P 500 lost 16.43 points, or 0.67 percent, to 2,437.03 and the Nasdaq Composite dropped 50.98 points, or 0.82 percent, to 6,188.03.

The Dow and benchmark S&P 500 hit fresh record highs on Monday, buoyed by a rebound in the tech sector.

The pan-European FTSEurofirst 300 index lost 0.66 percent and MSCI's gauge of stocks across the globe shed 0.69 percent.

Alongside MSCI's addition of China 'A' shares to the emerging markets benchmark, the index provider decided not to add Argentina to the same index and will consult on adding Saudi Arabia. Nigeria will remain under review as a frontier market.

The U.S. dollar strengthened for a second day, hitting a one-month high of 97.871 against a basket of major currencies as Federal Reserve officials maintained a hawkish tone on hiking interest rates.

On Monday, New York Fed President William Dudley said halting the rate-hiking cycle now would imperil the economy. That was followed by Boston Fed President Eric Rosengren, who said on Tuesday the era of low interest rates in the United States and elsewhere poses financial stability risks.

In addition, Chicago Federal Reserve Bank President Charles Evans said he was increasingly concerned that a recent softness in inflation is a sign the Fed will struggle to get price pressures back to its 2 percent objective. Dallas Federal Reserve President Robert Kaplan said the Fed needs to be careful about raising U.S. interest rates further due to low rates on 10-year Treasuries.

The dollar index rose 0.24 percent, with the euro down 0.2 percent to $1.1126. The greenback is up nearly 1 percent for the month.

Sterling was last trading at $1.2624, down 0.85 percent on the day. Bank of England Governor Mark Carney doused speculation that he might soon back higher interest rates, telling bankers on Tuesday that he first wanted to see how the economy coped with Brexit talks in coming months.
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Re: Global Currencies Update

Postby voight » Fri Jun 23, 2017 11:09 pm

The British pound isn’t the world’s worst currency in the one year since Brexit, but it’s close

pound-mosaic-boe.jpg


Exactly one year ago today, the UK voted 52% to 48% to leave the European Union after more than 40 years of membership. For now, you could argue that not much has changed—the UK won’t actually leave the EU until March 2019 and it’s still not even agreed what Brexit ultimately means. But there’s one big change that’s impossible to dispute: the effect of the vote on the pound.

In the past year, the British currency has shed 15% of its value against the dollar.

Untitled.png


Traders weren’t prepared for the UK’s decision to go for Brexit and on June 24, 2016, the pound had its worst day on record. Since then, a flash crash and a hung parliament have helped push down the pound even further.

The currency’s depreciation has had a number of knock-on effects. It’s pushed the annual inflation rate up to 2.9% from 0.5% a year ago. This has made slow wage growth worse; once inflation is added to the equation, wage growth is actually declining. This means consumers are spending far less. For years, consumption was the foundation of the UK’s economic growth. Now that has been diminished, and the UK started 2017 as the slowest-growing economy in the G7—yes, below Italy and France.

Even the positives of a cheaper currency haven’t fully materialized. It used to be that a weaker currency increased exports because it was cheaper for other countries to buy your products and that was good for economic growth. The UK’s national statistics office recently said this economic theory doesn’t hold up so well these days and that the relationship between sterling and exports was more complex. In today’s globalized world, so many components of exported products are made up from overseas imports, which cost more now thanks to the pound’s fall. And so the advantages of a cheaper pound on exports has been neutralised by more expensive imports.

The pound is the second-worst performing currency in the world in the past 12 months. Only Turkey has fared worse, but in recent months its currency has actually started to regain some lost ground.

Untitled1.png
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Re: Global Currencies Update

Postby voight » Sun Jun 25, 2017 10:39 am

Weekly Forex snap against LKR- 24/06/2017

curr.25.6.png


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- All major currencies reported a gain over LKR this week except GBP. To ease up the pressure on USD, SL government is confident that they will get the IMF disbursement in July.
- GBP will be volatile in coming months as UK has begun brexit negotiations. Mark Carney of ECB is confident that they can handle volatile GBP situations during this time.
- EUR is going strong and will likely to continue its run at the expense of GBP being volatile.
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Re: Global Currencies Update

Postby NC+ » Sun Jun 25, 2017 7:12 pm

Thanks Voight.. :-bd
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Re: Global Currencies Update

Postby voight » Sun Jun 25, 2017 7:55 pm

NC+ wrote:Thanks Voight.. :-bd


:-bd
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Re: Global Currencies Update

Postby godswen » Sun Jun 25, 2017 10:17 pm

Thanks for these posts Voight! Very useful.

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Re: Global Currencies Update

Postby voight » Thu Jun 29, 2017 12:08 pm

Euro Bulls Emboldened as Currency Clears Multi Month Roadblocks

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“The November high was really important and we did push through it,” said Niall O’Connor, a technical analyst at JPMorgan. “If we do break through the $1.16-17 zone, there’s really not a whole lot of resistance. We’ll start talking about a bigger base breakout for the euro.”

Traders brushed off suggestions by European officials Wednesday that the market misread remarks from European Central Bank President Mario Draghi a day earlier in which he downplayed deflation risks and opened the way for paring monetary stimulus. The common currency climbed 0.4 percent to $1.1379 as of 1:04 p.m. New York time, after it reaching as high as $1.1391. It gained as much as 1.49 percent on Tuesday.

Draghi’s “comments are a hawkish surprise and now set up expectations of an ECB tapering announcement in the fall,” Marvin Loh, senior global markets strategist at BNY Mellon, wrote in a note to clients.

Quantitative easing has held the euro down as the ECB keeps a negative deposit rate and continues to purchase domestic bonds to buoy asset prices. But with normalization on the horizon and political risks fading, the currency has rebounded 7.8 percent this year and gained against all of its G-10 peers. As the economy recovers, banks such as HSBC and UBS expect the euro to embark on a dollar-esque rally in the coming year.

To George Davis, chief fixed-income technical analyst at the RBC Dominion Securities, Tuesday’s breakout past $1.13 is revealing and consequential, given that the level was tested several times before being breached.

“If someone’s got a medium to longer term horizon, the price action we’ve seen in the past few weeks and especially today basically suggests that your bias would be to play the euro from the long side, using pullbacks down towards the $1.115 area as buying opportunities,” Davis said.

The euro moved sharply after Draghi’s comments, suggesting that investors were caught off guard as to the possibility that his speech could rattle markets. Commodity Futures Trading Commission positioning shows that hedge funds are just slightly short the euro and at levels far below their five-year average. Should the current rally continue, wrong-footed investors could accelerate the upward move, analysts from ABN Amro wrote in a note Tuesday.

Deutsche Bank raised its euro forecast to $1.16 or above by year-end, up from $1.03 previously, strategist George Saravelos wrote in a note. He argued that Draghi’s speech wasn’t the fundamental driver behind the change in view but it aptly marked the culmination of a number of developments that have caused the forecast update.

Yet technical levels aside, there are a few fundamental barriers that could cap the euro’s rise, the ABN Amro analysts, led by Nick Kounis said. If U.S. economic data begin to surprise on the upside, breaking a string of disappointing releases, some downward pressure on the dollar may ease. The euro may also run out of steam if Federal Reserve speakers succeed in convincing the market that they’ll stick to their rate hike path, the analysts wrote.
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Re: Global Currencies Update

Postby voight » Sun Jul 02, 2017 5:48 am

Weekly Forex snap against LKR- 30/06/2017

curr.30.06.png


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- A disastrous week for LKR against EUR and GBP as both currencies gained more than 2%. USD too gained slightly. It is being forecast that these currencies will be having further gains in coming weeks till towards end of the year. CBSL has indicated that they are likely to meet the reserve target at end of the year which to be effective LKR will be further depreciated against USD to maintain reserve levels.
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Re: Global Currencies Update

Postby NC+ » Sun Jul 02, 2017 3:50 pm

Thanks voight ... :)
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Re: Global Currencies Update

Postby Value » Sun Jul 02, 2017 3:58 pm

Thanks Voight for continuous updates...Great job!

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Re: Global Currencies Update

Postby voight » Sun Jul 02, 2017 4:04 pm

NC+ wrote:Thanks voight ... :)


:-bd
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Re: Global Currencies Update

Postby ruwa » Mon Jul 03, 2017 8:35 pm

A Sterling Opportunity

What: GBP/USD has fallen below 1.30 on the back of weak manufacturing PMI data released this morning. The market was disappointed with the 54.3 reading for June, which was the lowest level for three months, it had been looking for 56.3. This knee-jerk reaction lower in the pound has been driven by economic concerns about the failure of the UK manufacturing sector to benefit from the weakness in the pound. However, we think that this is an overreaction to the manufacturing data and that short-term weakness in sterling is an opportunity, as we expect the UK currency to break key resistance at 1.3050 before long.

How: There are a few reasons for our view.

Firstly, investors are warming to sterling. Bloomberg’s fear/greed indicator for GBP/USD remains in positive territory, as you can see in the chart below. This means that there are more GBP bulls than bears at the moment, based on GBP/USD’s average true range. This suggests that right now the bulls are in control. Even though sterling has fallen on Monday, the divergence with the F/G indicator suggests that this pair could stage a recovery.

Secondly, we believe that the prospect of a rate hike is not fully priced in by the market. The probability of a rat5e hike by the end of this year has risen to more than 50%, which is the highest expectations for more than a year. The prospect of a rate hike from the UK hasn’t driven sterling substantially higher, but we expect this to come. Lastly, we think that the market is overreacting to the manufacturing sector PMI’s, the important data point is the service sector survey, which is released on Wednesday, and is a better gauge of the UK economy. If this survey is stronger than expected then we could see a bounce back in the pound.

From a technical perspective, a move back to 1.2850 – the high from 28th June before GBP/USD jumped on the back of hawkish Carney comments – is key support and if cable does dip towards this level, say 1.2860, then we could see some buying interest. If GBP/USD falls below here, then it could be a sign that GBP/USD downside has further to go, so our idea would be negated. On the upside, we would look for a move back to 1.3030 – the recent high - initially, if we see a strong services sector PMI then this may open the way to 1.3150.

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Re: Global Currencies Update

Postby ruwa » Mon Jul 03, 2017 8:53 pm

Adjusting to the new monetary policy trajectories

By Kathy Lien, Managing Director of FX Strategy for BK Asset Management.

What was suppose to be a quiet week in the foreign-exchange market turned into an extremely eventful one that saw many major currencies hit new highs against the U.S. dollar. There were a few pieces of market-moving data (mostly from the Eurozone), but currencies were driven exclusively by central-bank speak. Investors were forced to reassess their positions after Bank of England Governor Mark Carney and European Central Bank President Draghi turned hawkish. The U.S. dollar, which experienced broad-based losses, was a casualty of the fresh opportunities presented by new monetary policy trajectories. As incoming data confirmed the optimism of central bankers in Europe and the U.S., data cast doubt on the Fed’s hawkishness leading to a sharp rise in EUR/USD and GBP/USD. Fed President Bullard — not a FOMC voting member — vocalized the market’s concerns when he said the Fed is raising interest rates against a backdrop of relatively weak growth and downside inflation surprises. However Bullard is the minority as many other U.S. policymakers (including Vice Chair Fischer and FOMC voter Dudley who spoke this week) support Janet Yellen’s positive view of the economy. There were some bright spots in U.S. data as well including the uptick in consumer confidence, smaller U.S. trade deficit, stronger manufacturing activity in the Chicago region, stronger confidence and upward revision to Q1 GDP growth. Unfortunately these reports were not meaningful enough to prevent losses in the greenback, leaving investors divided on whether a year-end rate hike is truly coming. Before buying what the Fed is selling, they want to see a significant pickup in job growth and stronger average hourly earnings. The next nonfarm payrolls report (due on Friday) will be a crucial test for the greenback and a deciding factor in determining whether EUR, GBP, CAD and other major currencies hit new highs. The Fed minutes should be hawkish but NFPs are the main focus. We expect USD/JPY to trade in a 110.50-113 range ahead of the jobs report and to breakout if the data impresses — or disappoints in a meaningful way. Meanwhile, the euro is on a tear. It is almost hard to believe that the currency is up 1000 pips, or 10 full cents, since the beginning of the year. The European Central Bank started the year with an extremely accommodative monetary policy stance and it walked into the second half with a completely different attitude. ECB President Draghi hasn’t uttered the word "taper" yet but there’s no question that they are laying the groundwork for removing stimulus. The ECB is an extremely calculating central bank that likes to set expectations for major policy changes months in advance so that when the actual change is made, investors have it fully discounted, making the market impact minimal. Which is exactly what it is doing now. At the very start of last week, Draghi kicked the ball in motion by saying they may change polity to a neutral stance. EUR/USD shot up in response, almost too quickly, prompting the ECB to come out and say that the market misjudged Draghi’s speech. However as he did not confirm this misinterpretation at the central-bank panel a few hours later, investors took the ECB’s comments as nothing more than an attempt to slow the euro's rise. They bid EUR/USD back up in response, sending the pair to a 1-year high. As Eurozone data continues to support the ECB’s hawkishness, it won’t be long before 1.15 is in the rear-view mirror. The most surprising shift came from Bank of England Mark Carney who only weeks ago raised concerns about low wage growth. At the ECB forum in Sintra, Portugal this past week, he said “some removal of monetary stimulus is likely to become necessary if the trade-off facing the MPC continues to lessen and the policy decision accordingly becomes more conventional.” These words caught the market off guard and took GBP/USD above 1.30 in a week with no losses. Looking ahead, GBP has 2 things going for it: the first is the BoE’s hawkishness and the second is Prime Minister May’s survival of the Queen’s vote. The minority government narrowly defeated Labour, allowing May to keep her job. Next week’s PMI reports will be extremely important in reinforcing the central bank’s hawkishness and the rise in sterling. If manufacturing- and service-sector activity accelerates, we should see GBP/USD close above this year’s high of 1.3050. With USD/CAD dropping to 1.30, many traders are wondering how much further the currency will fall. Like the euro, loonie has the support of data and policy guidance. In mid June, Bank of Canada Deputy Governor Wilkins set the loonie on an upward course when she said they may need to assess whether less stimulus is needed. This past week, Deputy Governor Patterson explained that the central bank is less dovish because they feel that the economic shock from oil is largely behind them. We haven’t heard much from Poloz who had multiple opportunities to address policy, so investors interpreted his silence as an endorsement of hawkish views. Yet it may be difficult for the positive trend of Canadian data to continue in light of the big improvements seen the previous month. Canada’s trade, IVEY PMI and employment reports are scheduled for release and we are looking for softer numbers all around. We’ve already seen GDP growth slow in April. So while USD/CAD is in a strong downtrend, we could see a relief rally back to 1.32 in the coming week. The Australian dollar, which climbed to fresh 3-month highs, will be in play this coming week. In addition to the latest PMI reports, retail sales and trade balance, the Reserve Bank of Australia also has a monetary policy announcement. When it last met, the central bank expressed concerns about the appreciating currency and weak growth in total hours worked. But their warnings fell on deaf ears as investors focused on the neutral policy stance. Going into this month’s meeting, we’ve seen further improvements in the labor market, a rally in iron ore prices and stronger Chinese import demand but businesses are nervous, home loans are falling and the trade surplus shrank significantly in April. So the central bank has no reason to change its views and if anything, it could express greater concern about the rising currency. With that in mind, there is significant resistance for AUD/USD between 0.7700 and 0.7750. Unlike AUD and CAD, the New Zealand dollar struggled to extend its gains this past week as a smaller trade surplus offset stronger business confidence. With no major economic reports on next week’s calendar, NZD should take its cue from the market’s appetite for U.S. and Australian dollars.

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Re: Global Currencies Update

Postby PAT » Mon Jul 03, 2017 10:57 pm

Thanks ruwa.....
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Without compromising your ability to Live Tomorrow……… :)

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Re: Global Currencies Update

Postby sashimaal » Mon Jul 03, 2017 11:49 pm

Thanks Ruwa
"Knowledge is being aware of what you can do. Wisdom is knowing when not to do it" - Brian Tracy


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