CURRENCY OUTLOOK AUGUST 2017 - moving money for better - Western Union ...
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MARKET CURRENCY
INSIGHT OUTLOOK
INTO AUGUST 2017
GLOBAL
CURRENCIES USD UNITED STATES
CAD CANADA
GBP UNITED KINGDOM
EUR EURO ZONE
CHF SWITZERLAND
PLN POLAND
CZK CZECH REPUBLIC
AUD AUSTRALIA
JPY JAPAN
CNY CHINA
NZD NEW ZEALAND
SGD SINGAPORE
moving money for betterCURRENCY OUTLOOK
UNITED STATES
JOE MANIMBO, CURRENCY STRATEGIST – NORTH AMERICA
July review August risk events and key themes
Bears were stalking the U.S. currency in July when it sank Down about 4% over the past month and 8% since the
to one-year lows overall and to its weakest in two years beginning of the year, is a bottom in sight for the U.S. currency?
against the euro. The dollar index bled about 4% in value as The usual cast of characters will be key to assessing the dollar’s EUR/USD (12 MTH)
political setbacks in Washington obscured President Trump’s coming prospects. For the dollar to form a tentative bottom,
economy‑positive agenda, and U.S. inflation drifted further the market will want to see better data on the U.S. economy 1.18
below the Federal Reserve’s 2% benchmark, dampening and see Washington advance meaningful legislation. Any scope
chances of another rate hike this year. for dollar strength could be a challenge if overseas growth 1.13
Meanwhile, in Europe the region’s recovery rolled on, bolstering continues to improve and offer latitude for central banks to
expectations for the ECB to reduce stimulus in the months ahead. normalize policy.
1.08
Nice job: America netted 222K jobs in June, the most in Events to watch: U.S. inflation and jobs data – first week
4 months. of August.
1.03
U.S. politics: White House headline risk also key. A S O N D J F M A M J J
Going the wrong way: Core inflation slowed a tick to 1.4%,
drifting further below the Fed’s 2% target. Global risks: Geopolitical risks, such as North Korea, could Source: Reuters, 2017
support the world’s reserve currency.
Barely alive: Health care reform remained elusive in
Washington, stalling the president’s broader agenda. ECONOMIC DATA
Base Rate: 1.00 - 1.25%
Annual GDP: 1.4%
August2017 EVENTS Annual Inflation: 1.4%
Aug 1 Aug 4 Aug 11 Aug 15 Aug 24-26 Unemployment: 4.4%
Personal Nonfarm CPI Retail Fed Symposium
Trade Balance: -$46.5bln
spending payrolls sales Jackson Hole, Wy
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 16 Aug 30
Aug 1 Aug 4 FOMC Q2 GDP
Inflation Unemployment minutes revision
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JOE MANIMBO, CURRENCY STRATEGIST – NORTH AMERICA
July review
CURRENCY OUTLOOK
CANADA
Canada’s dollar turned in a stellar July when it marched to
two-year highs against its embattled U.S. counterpart. Canada’s
August risk events and key themes
Expectations for U.S.-Canada interest rate policy should be a key
driver of USDCAD in the months ahead. If Canada can maintain
currency found sturdy pillars in the nation’s economy which solid economic momentum, it might just raise borrowing rates USD/CAD (12 MTH)
performed solidly over the first half of 2017, resulting in the before the Federal Reserve, a scenario that could add octane to
Bank of Canada’s first interest rate hike since 2010. The BOC in USDCAD’s selloff. And if Canada moves before the Fed, it would 1.40
mid‑July raised its key rate by 25 basis points to 0.75%. put cross-border interest rate policy on nearly level ground,
1.36
The weaker U.S. dollar, meanwhile, was a boon for oil markets, potentially slowing investment outflows to the U.S. to the
giving commodity-backed currencies an added boost. benefit of the Canadian dollar. 1.32
Canada’s economy found tailwinds in robust consumer The BOC doesn’t meet again until September 6.
1.28
spending and low unemployment. Next Fed meeting set for September 20.
The BOC raised rates on July 12, reversing one of its two Current odds: BOC 33% likely to hike in Sept, compared to a 1.24
A S O N D J F M A M J J
rate cuts in 2015. less than 10% chance for the Fed.
Source: Reuters, 2017
A fragile trade sector and low inflation remain weak spots in
the otherwise sturdy Canadian economy.
ECONOMIC DATA
Base Rate: 0.75%
Annual GDP: 3.7%
August2017 EVENTS Annual Inflation: 1.0%
Aug 4 Aug 9 Aug 18 Aug 22 Aug 30 Unemployment: 6.5%
Trade Housing CPI Retail Current
Trade Balance: -C$1.09bln
Balance Starts Sales account
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 4 Aug 31
Employment Q2 GDP
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NAWAZ ALI, CURRENCY STRATEGIST – UNITED KINGDOM
July review
CURRENCY OUTLOOK
UNITED KINGDOM
A few different factors caused a re-pricing of the Sterling/US
Dollar in July, allowing the exchange rate to eventually set a
August risk events and key themes
Although the picture has brightened for Sterling against the US dollar,
its performance against the euro is becoming a grave concern for UK
9½-month high of $1.3125 (July 18). This peak capped a 3.9% importers. On July 20, the European Central Bank’s monetary policy GBP/USD (12 MTH)
extension above the $1.2600 2017 average, and two of the decision caused quite a market reaction, with sterling/euro sinking
themes behind this re-pricing were as follows: by 1.4% that day to a 9-month low near €1.11. Moving forward into 1.36
Remarks around a potential UK interest rate rise from some August, here are potentially some of the big trading points ahead:
1.32
members of the Bank of England (BOE), including Governor August 03: although likely to stay unchanged, the BOE will
Mark Carney, who issued his comments on June 28. debate whether to raise interest rates to curb high inflation. 1.28
Much weaker-than-expected US inflation data on July 14 which In June, three out of eight BOE members unsuccessfully
called for a rate hike. 1.24
caused traders to reverse bets on the US Federal Reserve
raising interest rates at its meeting in September 2017. August 28: the UK and the EU will try for a third time to reach 1.20
an agreement on Britain’s final divorce bill and overseas workers’ A S O N D J F M A M J J
rights. Should a deal clear this first Brexit hurdle, Sterling would Source: Reuters, 2017
probably rally. But what if negotiations go nowhere yet again?
GBP/EUR predictions: according to July’s Reuters FX Poll,
about 68% of year-end predictions range from €1.18 down to
ECONOMIC DATA
€1.09. However, on current form, GBP/EUR could fall to €1.10
or below within weeks. Base Rate: 0.25%
Annual GDP: 2.0%
August2017 EVENTS Annual CPI: 2.6%
Aug 1 Aug 10 Aug 16 Aug 24-26 Unemployment: 4.5%
UK Manufacturing UK Manufacturing UK Unemployment US Jackson Hole
Trade Balance: £-11.86 bln
PMI Survey Output Data Economic Symposium
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 3 Aug 15 Aug 17 Aug 28
- UK Services PMI Survey UK Inflation UK Retail 3rd Round Brexit
- BoE Interest Rate Decision Data Sales Data Negotiations
- BoE Inflation Report
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EURO ZONE
GUILLAUME DEJEAN, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA
July review August risk events and key themes
The euro remained strong in July as bullish investors, awaiting The QE tapering story should remain the key driver of euro volatility
QE tapering signals from European monetary officials, continued during the second half of the summer, given that Italian risks
to increase their ‘long euro’ positions. Nevertheless, some profit related to its banks and a snap election, have significantly eased. GBP/EUR (12 MTH)
taking was witnessed ahead of the ECB’s July meeting as investors Furthermore, upcoming German elections expected in September
turned nervous. The persistent lack of traction in eurozone inflation don’t look to be a big deal for investors. The main question is when 1.21
growth, and recent strengthening of the euro suggested a dovish will the ECB taper? A substantial correction lower in the euro
stance from ECB President Mario Draghi. However, following the is possible, given investors are heavily invested in a major ECB 1.18
meeting he appeared unfazed by this trend and suggested little announcement in September. Therefore, the downside euro potential
reluctance within the ECB to start QE tapering talks. Mr. Draghi in coming months might be much bigger if the ECB stays muted. 1.15
said these talks will start this autumn. By offering no fodder to A Reuters survey indicates that almost 50% of economists
euro bears, and some encouragement to euro bulls to continue 1.12
expect the ECB will announce some tapering of its assets
backing their bets on future ECB tapering, Draghi triggered purchases in September.
another substantial rally of the euro against most of its peers. 1.09
A S O N D J F M A M J J
The Walls Street Journal reported that Draghi could give a
Euro jumped by 1.4% and 1.0% against GBP and USD hint of the ECB’s September agenda during the economic Source: Reuters, 2017
respectively on July 20 following the press conference of symposium in Jackson Hole, US in late August.
ECB President Mario Draghi.
EUR/USD climbed near a 2-year peak of $1.1677 the day after
Inflation momentum in the eurozone should remain highly
scrutinized by central bankers.
ECONOMIC DATA
the ECB meeting.
First reforms in France under Macron and German election
Policy rate: 0.0%
campaign will be of interest.
GDP: 1.9% (annualized)
August2017 EVENTS Inflation: 1.3% (annualized)
Aug 1 Aug 14 Aug 24-26 Unemployment: 9.3%
Flash Industrial US Jackson Hole
Trade Balance: €21.4 Bln
Q2 GDP production Economic Symposium
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 3 Aug 16 Aug 23 Aug 31
Retail Revised Flash - Flash CPI
Sales Q2 GDP PMI - Unemployment rate
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GEORGE VESSEY, CURRENCY ANALYST – UK
July review
The Swiss Franc experienced high volatility in July with
USD/CHF falling to one-year lows near 0.94 as risk averse
CURRENCY OUTLOOK
SWITZERLAND
August risk events and key themes
Given its global status as a safe haven, CHF typically experiences
upward pressure in times of uncertainty. With the Trump-Russia
investigation heating up and Brexit negotiations continuing
sentiment boosted demand for the franc. Although strong GBP/CHF (12 MTH)
against the US Dollar, over the course of the month EUR/CHF towards the end of August, investors may increase demand for
witnessed a steady rise towards one-year highs of 1.11, pushed the franc. On the contrary, following the ECB meeting last month 1.31
higher by increasing speculation about the European Central and the rapid appreciation of the euro, coupled with the Federal
Bank (ECB) reducing its quantitative easing program this Reserve having raised rates twice this year and expected to do
so again before year-end, CHF could consequently come under 1.27
Autumn. At the end of the month the rate moved even further,
selling pressure as speculation over monetary policy divergence
above 1.14.
between the SNB and these central banks increases. 1.23
Interestingly, Switzerland’s exports hit an all-time high in
In July EUR/CHF appreciated over 1% and could continue if
the first half of this year and the Swiss National Bank (SNB)
eurozone data highlights strong economic conditions from the bloc.
reported a reduction in foreign-exchange reserves, which 1.19
Market participants should be cautious of a correction in the A S O N D J F M A M J J
suggests the central bank may have pulled back on its
euro due to substantial speculation over the ECB announcement
currency intervention efforts. Source: Reuters, 2017
in September. A possible weakness in the Euro could drag both
EUR/CHF and USD/CHF down amid increased demand for CHF.
GBP/CHF reversed the downward trend of the last months and ECONOMIC DATA
trades more than 2 cents above the year average of 1.25. August
hosts the Bank of England interest rate decision and the third
round Brexit negotiations which could exacerbate the downside
Base Rate: -0.75%
risk to potentially test new lows not seen since November 2016. Annual GDP: 1.1% (Q1)
August2017 EVENTS Annual CPI: 0.2% (June)
Aug 1 Aug 7 Aug 15 Aug 22 Aug 28 Unemployment: 3.2%
Manufacturing Inflation Producer and Trade Brexit
Trade Balance: 2.8 Bln (CHF)
PMI Import Prices Balance negotiations
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 2
Retail Aug 8
Sales Unemployment
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ROBERT BATES, CURRENCY ANALYST – UK
July review
CURRENCY OUTLOOK
POLAND
Political unrest is threatening the PLN’s strong 2017 performance.
Poland’s ruling party in parliament, PiS, had a ruling approved
August risk events and key themes
A resolution to the current political turmoil mentioned above
will have a large bearing on the zloty’s performance in August.
through the upper chamber in parliament so that the country’s Providing the situation is resolved after the Presidential veto, USD/PLN (12 MTH)
supreme court and the rest of the judicial system will come focus will be on the GDP number on the 16th August. If we
under its political control. The Eurozone has strongly opposed see a similar impressive number as in Q1 2017, which was 4% 4.40
the move as undemocratic, and protests have broken out within growth y/y and the biggest annual jump in 5 quarters, it seems
4.20
Poland. The zloty weakened against the Euro to 4.2628 on unlikely that the stronger EM currency trend we’ve seen will
July 21 – a high not seen since April – Poland’s President Andrzej change in the short term. 4.00
Duda has already announced that he will veto the proposals. The strength of the zloty means that inflation was at 1.5% y/y
Despite this the zloty took advantage of weakness in the in July - the lowest level for inflation since December 2016. 3.80
US Dollar to reach year highs whilst threatening to break Interest rates remain unmoved at 1.5% and this is not 3.60
below the 3.6 support level. We haven’t seen the 3.6 mark in forecasted to change in the near future. Unemployment is A S O N D J F M A M J J
USD/PLN breached since 2015. the only main concern sitting at 7.4%, though this is better Source: Reuters, 2017
The zloty has rallied almost 16% against the dollar this year as than several Eurozone countries.
investors’ appetite for emerging market (EM) currencies has
continued to be strong. The zloty also moved to below the 4.7
ECONOMIC DATA
level against Sterling for the first time since October 2016.
Base Rate: 1.5%
Annual GDP: 4.0% (Q1)
August2017 EVENTS Annual CPI: 1.5% (Jun)
Aug 1 Aug 7 Aug 14 Aug 17 Aug 24 Unemployment: 7.4% (Jun)
Purchasing Central Bank Net Corporate Unemployment
Current Account: -179m (May)
Manager Index FX Reserves Inflation Sector Wages
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 11 Aug 18
Current - Retail Sales
Account - Industrial Output
- Producer Price Index
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SHANE SPARKS, CURRENCY ANALYST – UK
July review
CURRENCY OUTLOOK
CZECH REPUBLIC
The Czech koruna strengthened even further in July, reaching its
strongest point against the euro since 2013.
August risk events and key themes
Speculation over whether the CNB will raise interest rates will
be key volatility driver as August begins. The CNB could become
The exchange rate was driven down by market speculation the first European central bank to hike rates in 2017. USD/CZK (12 MTH)
that the Czech National Bank (CNB) could proceed to a first August 03: the CNB will hold its interest rate meeting, with
26.3
interest rate hike soon, causing the pair to fall below 26.0 for some betting the CNB will increase its benchmark rate by 20
the first time since November 2013. basis points to 0.25% from the current 0.05% rate. 25.3
Recent Czech data saw GDP growth at 2.9% y/y in Q1, well August 03: if the CNB hikes, this could see the koruna continue
24.3
above the CNB’s forecast of 2.5% y/y. July’s retail sales data to strengthen past its current multi year highs, especially if
also reflected strong growth with a 5.7% y/y uplift. the CNB signals that another rate rise in 2017 can happen.
23.3
The koruna is at 4-year highs against Sterling (28.9). With
further Brexit talks set to continue late-August, UK political 22.3
A S O N D J F M A M J J
uncertainty could potentially drive GBP/CZK even lower.
Source: Reuters, 2017
The euro could regain some of its losses against the CZK if
we see further signals from the European Central Bank that
it intends to reduce its Quantitative Easing policy. A potential ECONOMIC DATA
reduction could happen as soon as September.
Base rate: 0.05%
Annual GDP: 2.9%
August2017 EVENTS Annual CPI: 2.3%
Aug 1 Aug 4 Aug 8 Aug 16 Aug 28 Unemployment: 4.0%
Manuf’ng Retail Unemployment Q2 GDP Brexit
Trade Balance: 14.35bln
PMI Sales Rate negotiations
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 3
- Czech National Bank Aug 9
Interest Rate Decision Inflation
- BoE Interest Rate Decision
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STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC
July review
CURRENCY OUTLOOK
AUSTRALIA
The Australian dollar surged to two-year highs versus the US
dollar last month as local economic data improved.
August risk events and key themes
The market’s heightened state of expectation saw traders
push the AUDUSD to two-year highs after the Reserve Bank of
A weaker greenback – and falling US bond yields – also caused Australia minutes released on 18 July. AUD/USD (12 MTH)
the AUD to gain as it became more attractive on a relative basis. The RBA discussed a revised “neutral” setting of 3.50%
0.80
The Australian dollar’s relatively high interest rates make it an for local interest rates. The market saw this discussion as a
attractive investment destination. potential signal of upcoming interest rate increases.
0.77
The Aussie saw good gains against other currencies as it hit Later in the month, however, the AUDUSD fell after RBA
two-month highs versus the New Zealand dollar, three-month assistant governor Guy Debelle said in a speech that “no
highs against the British pound and 18-month highs against the significance should be read into the fact the rate was 0.74
Japanese yen. discussed” and the current rate settings “will likely continue for
The Australian economy’s unemployment rate saw another the foreseeable future”. 0.71
A S O N D J F M A M J J
strong result with the unemployment rate steady at the For now, it appears the RBA is still “on hold”. But for how long?
lowest levels since February 2013. Local policy setting for the Australian dollar will be critical Source: Reuters, 2017
Higher commodity prices have also boosted the Australian
dollar with iron ore up almost 20% since mid-June.
with the RBA meeting on 1 August.
Inflation and job growth will also be critical. The next
ECONOMIC DATA
employment reading is due on 17 August.
Base Rate: 1.50%
Annual GDP: 1.70%
August2017 EVENTS Annual CPI: 2.10%
Aug 1 Aug 4 Aug 15 Aug 24-26 Unemployment: 5.60%
RBA Retail RBA US Jackson Hole
Trade Balance: 2.5bln (AUD)
Decision Sales Minutes Economic Symposium
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 3
Trade Aug 17
Balance Employment
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JAPAN
GUILLAUME DEJEAN, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA
July review
July presented another month of divergence between the EUR/JPY
and USD/JPY rates. The EUR/JPY pair extended its gains by 1.3% in
August risk events and key themes
The monetary desynchronization story could keep on pushing
the EUR/JPY rate to higher levels in August. The magnitude
July, and has risen by 13% since mid-April (as of July 20). This rise of the upside potential is nevertheless dependent on signals GBP/JPY (12 MTH)
comes from a widening of bonds yield spreads (long-term interest sent by European Central Bank (ECB) officials ahead of the
rates) between Europe and Japan. While a monetary tightening bank’s September meeting. Any argument supporting a likely 149
cycle is looming in Europe, the Bank of Japan (BOJ) still holds a QE tapering announcement would trigger another rally for euro
very accommodative stance as Japanese inflation is anchored against yen. Awaiting tangible signals, the EUR/JPY rate could 143
at a very low level. Conversely, USD/JPY erased almost 2% of take a breather and consolidate within a ¥125-130 range. The
137
earlier gains in the second half of July as investors turned nervous future path of USD/JPY will mainly depend on the degree of
after the release of new information strengthening doubts about political fears in the US, as investigations into Donald Trump
131
possible collusion between Donald Trump and Russia. might hamper his political and economic agenda.
BOJ pushed back the deadline by a year for when it expects The annual Jackson Hole gathering of central bankers in the 125
to reach its inflation target of 2% (beyond March 2019). US in late-August could give us new updates about future A S O N D J F M A M J J
Ultra‑accommodative monetary conditions could then be Federal Reserve, ECB and BOJ monetary policy. Source: Reuters, 2017
extended in Japan.
ECONOMIC DATA
USD/JPY might fall towards April lows of ¥108-¥110 if political
EUR/JPY returned above ¥130 for the first time since concerns in the US increase and/or threats of North Korean
February 2016. USD/JPY fell below ¥112 ahead of the attacks hit the headlines again.
testimony of Donald Trump’s elder son before the Senate. EUR/JPY could extend its rally and head toward 2016 highs of
Policy rate: -0.1%
¥132-133 if ECB officials signal any QE tapering.
GDP: 1.3% (annualized)
August2017 EVENTS CPI: 0.4% (annualized)
Aug 14 Aug 17 Aug 24-26 Aug 30 Unemployment: 3.1%
Flash Trade US Jackson Hole Retail
Trade Balance: ¥439.9 Bln
Q2 GDP Balance Economic Symposium Sales
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 29
Aug 25 Household
CPI spending
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STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC
July review
CURRENCY OUTLOOK
CHINA
The Chinese yuan was mostly stronger in July as improving
economic growth and a mild monetary tightening in terms of
August risk events and key themes
As with many currencies, Chinese currency markets have been
wrong-footed by the unexpected weakness of the US dollar this
liquidity caused the Chinese currency to gain. year. These moves saw the CNY approaching nine-month highs. USD/CNY (12 MTH)
Chinese economic growth ticked higher in the June quarter with Further volatility can be expected.
7.00
annual GDP at 6.9% – equaling the best rate in more than two The improving economic picture and returned of leveraged
years – with strong results also seen in industrial production and speculation has seen some analysts call for tighter policy from 6.90
retail sales. the People’s Bank of China. If the PBOC does act, the CNY
This pick-up in growth aligns with better data both around the could gain further. 6.80
region and across the world. Growth data will be closely watched as will commentary from
6.70
The CNY continued to climb versus the US dollar with the central bank officials. A tightening in policy is likely to be only
Chinese currency nearing nine-month highs during the month. small but could have considerable effect. 6.60
A S O N D J F M A M J J
The CNY climbed to six-month highs versus the Japanese yen Local focus will soon turn to politics with the 19th Party
but fell to three-year lows versus the euro. Congress to be held later in the year. The gathering is likely to Source: Reuters, 2017
anoint the next generation of Chinese leaders.
ECONOMIC DATA
Base Rate: 4.35%
Annual GDP: 6.90%
August2017 EVENTS Annual CPI: 1.50%
Aug 8 Aug 14 Aug 31 Unemployment: 4.00%
Trade Industrial Manufacturing
Trade Balance: $40.5bln (USD)
Balance Production PMI
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 14
Aug 9 Retail
CPI Sales
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STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC
July review
CURRENCY OUTLOOK
NEW ZEALAND
The New Zealand dollar marched towards two-year highs versus
the US dollar last month despite a short stumble after weaker
August risk events and key themes
An improving global outcome and better confidence numbers
caused markets to speculate the Reserve Bank of New Zealand
than expected inflation numbers. might soon raise rates. NZD/USD (12 MTH)
The NZD has seen multi-month highs versus a range of However, an annual inflation rate of 1.7% was well below
0.75
currencies as the uptick in global growth and better local data the 1.9% expected and saw the NZD sold heavily after the
support the currency. announcement. Regardless, the kiwi regained the lost ground 0.73
The NZD has benefited as US bond yields eased. With later in the month.
0.71
relatively higher interest rates, the NZD is helped higher by With the NZDUSD near two-year highs, good news on the
falling US bond yields. inflation front might be needed for further gains.
0.69
While inflation figures were weaker, other data has remained This month, employment, due 2 August, and retail sales, due
strong. Historically high migration levels continue to boost 14 August, will be closely watched. 0.67
A S O N D J F M A M J J
confidence and growth. Like all currencies, the NZD is likely to be driven by the
Source: Reuters, 2017
ongoing political struggles in the US.
The RBNZ decision, due 10 August, will provide further
guidance on the central bank’s thinking.
ECONOMIC DATA
Base Rate: 1.75%
Annual GDP: 2.50%
August2017 EVENTS Annual CPI: 1.70%
Aug 2 Aug 10 Aug 14 Unemployment: 4.90%
Dairy RBNZ Retail
Trade Balance: $103m (NZD)
Prices Sales
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Aug 16
Aug 2 Dairy
Employment Prices
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STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC
July review
CURRENCY OUTLOOK
SINGAPORE
The Singapore dollar was boosted throughout July as improving
global data and stronger share markets boosted sentiment
August risk events and key themes
The SGD might continue to gain as improving global economic
data boosts trade. The SGD’s strength is closely tied to global
towards Asia. The SGD was a key beneficiary. trade volumes. USD/SGD (12 MTH)
The SGD’s best gains were against the US dollar. The USD fell to US inflation – and its impact on US interest rates – can also
1.48
one-year lows versus a basket of currencies as ongoing political affect the SGD.
difficulties raised concerns about the US administration’s ability to Any slowdown in the pace of US rate hikes could boost the 1.44
prosecute its agenda. SGD. Upcoming announcements from the US Federal reserve
1.40
The USDSGD fell to ten-month lows as the greenback will be closely watched.
weakened. Looking forward, local export data on 17 August and inflation 1.36
The SGD also gained versus the Japanese yen as markets data on 23 August will be the key releases.
favoured emerging currencies. The JPY fell to 15-month lows. 1.32
The Monetary Authority of Singapore next meets in early A S O N D J F M A M J J
The SGD fell versus the euro as the European Central Bank October. Inflation remains below target and a change in the
Source: Reuters, 2017
signalled a more positive view. MAS’s policy remains a possibility.
ECONOMIC DATA
SIBOR: 1.06%
GDP: 2.50%
August2017 EVENTS CPI: 1.50%
Aug 2 Aug 11 Aug 17 Aug 23 Unemployment: 2.30%
Manufacturing Retail Exports CPI
Trade Balance: $6.4bln (SGD)
PMI Sales
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Aug 14
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Western Union Business Solutions has based the opinions expressed in this ASIA PACIFIC
communication on information generally available to the public. Western Union Australia New Zealand
Business Solutions makes no warranty concerning the accuracy of this information and
specifically disclaims any liability whatsoever for any loss arising from trading decisions In Australia, Western Union Business Solutions is a division of The Western Union Western Union Business Solutions is a division of The Western Union Company. In
based on the opinions expressed and information contained in this communication. Company. In Australia, Custom House Currency Exchange (Australia) Pty Limited New Zealand, Western Union Business Solutions (Australia) Pty Ltd, NZ branch
Such information and opinions are for general information purposes only and are not ABN 95 086 278 659 and AFSL 238290 and/or Western Union Business Solutions (company number 3527631 and FSP 168204) (“WUBS”) is the issuer of the financial
intended to present advice with respect to matters reviewed and commented upon. (Australia) Pty Limited ABN 24 150 129 749 and AFSL 404092 (collectively referred to products (if any) referred to in this communication. A Product Disclosure Statement is
as “WUBS”) is the issuer of the financial products (if any) referred to in available for each of the financial products that WUBS issues and can be obtained by
This communication is not directed to, or intended for distribution to or use by, any this communication. visiting http://business.westernunion.co.nz/about/compliance/.
person or entity who is a citizen or resident of or located in any locality, state,
country or other jurisdiction where such distribution, publication, availability or use A Product Disclosure Statement is available for each of the financial products that Any advice provide in this communication is class (general) advice only and does not
would be contrary to law or regulation or which would subject WUBS or its affiliates WUBS issues (if any) and can be obtained by visiting our compliance and legal web take account of your financial situation, objectives and/or needs. Because of this,
to any registration or licensing requirement within such jurisdiction. page. Unless we expressly state otherwise any information given by WUBS in relation before you act on it (including making any decisions and/or trading) you should
to financial products will be factual information only and does not take account of your consider its appropriateness having regard to your own objectives, financial situation
This communication has been prepared solely for informational purposes and does financial situation, objectives or needs. Because of this, before you act on it (including and/or needs. WUBS recommends that you seek personalised (personal) financial
not in any way create any binding obligations on either party. Relations between you making any decision and/or trading) you should consider its appropriateness having advice from an authorised financial adviser.
and WUBS shall be governed by the applicable terms and conditions provided to you regard to your own objectives, financial situations and/or needs.
before you undertake any transaction with WUBS. No representations, warranties or Singapore
conditions of any kind, express or implied, are made in this communication. Before you decide to acquire a financial product from WUBS you should read and
consider the relevant product disclosure statement. In Singapore, Western Union Business Solutions is a division of The Western Union
© 2017 Western Union Holdings Inc. All rights reserved. Company. Depending on the nature and scope of the services, services in Singapore
Hong Kong
are provided by Western Union Business Solutions (Singapore) Pte Ltd (“WUBS
In Hong Kong, Western Union Business Solutions is a division of The Western Union Singapore”) and/or WUBS Financial Services (Singapore) Pte Ltd (“WUBS FS
Company. Services in Hong Kong are provided by Western Union Business Solutions Singapore”) (collectively referred to as “WUBS”).
(Hong Kong) Limited (company number 1474270 and CE number BGY438) (“WUBS”).
WUBS FS Singapore is a capital markets services licence holder for leveraged foreign
WUBS is a licensed money service operator under the Anti-Money Laundering and exchange trading, and an exempt financial adviser for advising others, either directly
Counter-Terrorist Financing (Financial Institutions) Ordinance (Chapter 615, the Laws or indirectly through publications or writings, and whether in electronic, print or other
of Hong Kong). WUBS is also licensed by the Securities and Futures Commission in form, concerning contracts or arrangements for the purposes of foreign exchange
Hong Kong to conduct Type 3 (leveraged foreign exchange trading) regulated activity. trading and leveraged foreign exchange trading (other than advising others by issuing
Risk Disclosure Statements or promulgating research analyses or research reports, whether in electronic, print or
1. The risk of loss in leveraged foreign exchange trading can be substantial. You may other form, concerning any investment product and advising on corporate finance
sustain losses in excess of your initial margin funds. Placing contingent orders, such within the meaning of the Securities and Futures Act, Cap 289 (“SFA”).
as “stop loss” or “stop limit” orders will not necessarily limit losses to the intended WUBS Singapore is a remittances licence holder. All payment and remittance
amounts. Market conditions may make it impossible to execute such orders. You may services referred to in this communication are offered under WUBS Singapore’s
be called upon at short notice to deposit additional margin funds. If the required Remittance Licence issued by the Monetary Authority of Singapore (“MAS”). WUBS
funds are not provided within the prescribed time, your position may be liquidated. Singapore’s service does not include any service under the Payment Systems
You will remain liable for any resulting deficit in your account. You should therefore (Oversight) Act 2006.
carefully consider whether such trading is suitable in light of your own financial WUBS is not licensed, registered or authorised, or hold themselves out to be
position and investment objectives. licensed, registered or authorised to conduct any regulated activities under the SFA,
2. Client assets received or held by WUBS or a WUBS group company outside financial advisory services under the Financial Advisers Act, Cap 110, money
Hong Kong are subject to the applicable laws and regulations of the relevant changing business and remittance business under the Money-Changing and
overseas jurisdiction which may be different from the Securities and Futures Remittance Business Act, Cap 187, and any other financial services or activities
Ordinance (Cap. 571) and the rules made thereunder. Consequently, such client assets subject to regulatory supervisions by the MAS or any other authority in Singapore,
may not enjoy the same protection as that conferred on client assets received or held save in respect of the specific activities described above for which each entity holds
in Hong Kong. a licence or an exemption to conduct such specific activities.DISCLAIMERS
NORTH AMERICA France Malta
Canada In France, Western Union Business Solutions is a division of The Western Union In Malta, Western Union Business Solutions is an operating division of The Western
In Canada, Western Union Business Solutions is a division of The Western Union Company and provides services in France through its wholly-owned subsidiary Union Company. Services in Malta are provided by Western Union Business Solutions
Company. Services in Canada are provided by Custom House ULC, a company within Western Union International Bank GmbH, French branch, (referred to as “WUBS” or (Malta) Limited, a limited company registered in Malta (Company Number C22339) with
the Western Union Business Solutions division. “Western Union Business Solutions”). its registered office at Il-Piazzetta, Tower Road, Sliema, SLM 1605, Malta and which is
Western Union International Bank GmbH, French branch (RCS Nanterre 750 938 094) licensed and regulated by the Malta Financial Services Authority to undertake the
USA business of financial services in terms of the Financial Institutions Act) (“WUBS”).
has a registered place of business at Tour Manhattan, 5-6 place de l’Iris, 92095 Paris
In USA, Western Union Business Solutions is a division of The Western Union Company. La Défense Cedex, France and is a branch of Western Union International Bank GmbH Poland
Services in the US are provided by Custom House USA, LLC (NMLS ID: 906985) and (Registration Number 256184t), an Austrian company whose regsistered office is at
Western Union Business Solutions (USA), LLC (NMLS ID: 907333) (collectively referred In Poland, Western Union Business Solutions is a division of The Western Union
Schubertring 11, 1010 Vienna, Austria. Company and provides services in Poland through Western Union International Bank
to as “WUBS” or “Western Union Business Solutions”). For a complete listing of US
state licensing, visit http://business.westernunion.com/about/notices/. For additional Germany GmbH, Polish Branch (referred to as “WUBS” or “Western Union Business Solutions”).
information about Custom House USA, LLC and Western Union Business Solutions In Germany, Western Union Business Solutions is a division of the Western Union Western Union International Bank GmbH, Polish Branch (KRS No: 0000458059, NIP
(USA), LLC, visit http://business.westernunion.com/about/compliance/. Company and provides services in Germany through Western Union’s wholly-owned No: 1080015316), has a registered place of business at Al. Jana Pawla II 29, 00-867
subsidiary Western Union International Bank GmbH, Germany branch (referred to as Warsaw, Poland, and is a branch of Western Union International Bank GmbH
“WUBS” or “Western Union Business Solutions”). (registration number 256184t) Schubertring 11, 1010 Vienna, Austria.
Western Union International Bank GmbH, Germany branch, has a registered place of Switzerland
EUROPE business at Solmsstrasse 18, 60486 Frankfurt am Main, Germany and is a branch of In Switzerland, Western Union Business Solutions is a division of The Western Union
Austria Western Union International Bank GmbH (registered in Austria, Registration Number Company. Services in Switzerland are provided by Rüesch International, LLC (Swiss
In Austria, Western Union Business Solutions is a division of the Western Union 256184t, Regsistered Office address: Schubertring 11, 1010 Vienna, Austria). branch), with a registered place of business at Werdstrasse 2, P.O. Box 2063, 8021
Company and provides services in Austria through Western Union’s wholly-owned Italy Zurich, Switzerland (referred to as “WUBS” or “Western Union Business Solutions”).
subsidiary, Western Union International Bank GmbH (referred to as “WUBS” or In Italy, Western Union Business Solutions is a division of the Western Union Company Western Union Business Solutions has based the opinions expressed herein on
“Western Union Business Solutions”). and provides services in Italy through its wholly owned subsidiaries, Western Union information generally available to the public. Western Union Business Solutions
Western Union International Bank GmbH is registered in Austria (company number International Bank GmbH, Italy Branch and Custom House Financial (UK) Limited makes no warranty concerning the accuracy of this information and specifically
FN256184t), Schubertring 11, 1010 Vienna, Austria. (which does business under the trade name of Western Union Business Solutions). disclaims any liability whatsoever for any loss arising from trading decisions based on
Czech Republic Custom House Financial (UK) Limited offers the Online Foreign Exchange service the opinions expressed and information contained herein. Such information and
(online FX); all other services are offered by Western Union International Bank GmbH, opinions are for general information only and are not intended to present advice with
In the Czech Republic, Western Union Business Solutions is a division of The Western
Italy branch. respect to matters reviewed and commented upon.
Union Company and provides services in the Czech Republic through Western Union
International Bank GmbH, organizační složka (referred to as “WUBS” or “Western Western Union International Bank GmbH, Italy Branch (Registered Office in Rome: via United Kingdom
Union Business Solutions”). Virigilio Maroso 50, 00142 Italy; Fiscal Code and Companies House Registration In the UK, Western Union Business Solutions is a division of The Western Union
Western Union International Bank GmbH, organizační složka is registered in the number: 13068651002; Enrolled in the Bank Register held by Bank of Italy (no. 3446)), is Company. Services in the UK are provided by Custom House Financial (UK) Limited
Czech Commercial Register held by the Municipal Court in Prague, identification a branch of Western Union International Bank GmbH, a company organised under (which does business under the trade name of Western Union Business Solutions) or
number 015 55 332, has a registered place of business at Václavské náměstí 62, 110 Austrian Law (Companies House Registration number 256184t; Registered Office: Western Union Business Solutions (UK) Limited (collectively referred to as “WUBS”
00 Prague 1, Czech Republic, and is a branch of Western Union International Bank Schubertring 11, A-1010 Vienna, Austria; Corporate Capital: €12.000.000; Sole or “Western Union Business Solutions”).
GmbH (registration number 256184t) Schubertring 11, 1010 Vienna, Austria. Shareholder (and therefore subject to the direction and coordination activity of): Custom House Financial (UK) Limited (registered in England, Company Number
Western Union Overseas Limited) and which is a bank registered on a list of banks 04380026, Registered Office Address: 12 Appold Street, London EC2A 2AW) is
Western Union International Bank GmbH is a bank registered on a list of banks
maintained by the Austrian Financial Market Authority (Österreichische authorised by the Financial Conduct Authority under the Payment Services
maintained by the Austrian Financial Market Authority (Finanzmarktaufsicht).
Finanzmarktaufsicht). Regulations 2009 (Register Reference: 517165) for the provision of payment services
Western Union International Bank GmbH, organizační složka is registered on a list of
banks and branches of foreign banks maintained by the Czech National Bank. Custom House Financial (UK) Limited (Incorporated in England; Company Number: and is registered as an MSB with HM Revenue & Customs (Registered No: 12140130).
04380026; Registered Office: 12 Appold Street, London EC2A 2AW; Corporate Western Union Business Solutions (UK) Limited (registered in England, Company
Capital £800,001.00; Sole Shareholder (and therefore subject to the direction and Number 02854737, Registered Office Address: 12 Appold Street, London, EC2A 2AW)
coordination activity of): Western Union Processing Limited), is authorised by the UK is authorised by the Financial Conduct Authority under the Payment Services
Financial Conduct Authority under the payment services regulations 2009 (register Regulations 2009 (Register Reference: 536611) for the provision of payment services
reference: 517165) for the provision of payment services and is registered as an MSB with HM Revenue & Customs (Registered No: 12122416).Don’t let the currency market detract from your bottom line. Contact Western Union Business Solutions www.business.westernunion.com United States Canada United Kingdom Australia Tel: 1 866 953 6491 Tel: 1 888 987 7612 Toll Free: 0800 096 1229 Tel: +612 8001 2100 business.westernunion.com business.westernunion.ca business.westernunion.co.uk business.westernunion.com.au GLOBALOFFICES
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