CURRENCY OUTLOOK MARCH 2017 - moving money for better

 
CURRENCY OUTLOOK MARCH 2017 - moving money for better
MARKET       CURRENCY
INSIGHT      OUTLOOK
INTO         MARCH        2017

GLOBAL
CURRENCIES   USD UNITED STATES
             CAD CANADA
             GBP UNITED KINGDOM
             EUR EURO ZONE
             CHF SWITZERLAND
             AUD AUSTRALIA
             JPY JAPAN
             CNY CHINA
             NZD NEW ZEALAND
             SGD SINGAPORE
             MXN MEXICO
             BRL BRAZIL
             moving money for better
CURRENCY OUTLOOK
                                                               UNITED STATES
 JOE MANIMBO, CURRENCY STRATEGIST – NORTH AMERICA

 February review                                                          March risk events and key themes
 The U.S. dollar found some comfort in February however                   The dollar’s Q1 fate is seen to be resting on the Fed’s mid-March
 meaningful gains continued to elude the currency. The USD has            policy decision when the central bank renders both an interest rate
 waxed and waned in 2017 as dollar bulls get acquainted with              and unveils new forecasts for growth. No rate hike is expected,                EUR/USD (12 MTH)
 a new administration in Washington that has signaled a lower             but a stronger signal of tighter monetary policy on the horizon
 tolerance of a strong currency.                                                                                                                         1.15
                                                                          could allow the dollar to test the upper limits of its range. Still, the
 Meanwhile, a lack of detail from the Trump administration about          speed at which the dollar swings may hinge on what transpires in
 its plans to accelerate growth in the world’s biggest economy            Washington on the policy and stimulus front.                                   1.11

 over the coming years has also dampened dollar enthusiasm.               „„ Dollar poised for upward or downward March?
 Still, bouts of dollar weakness have been curtailed by the U.S.                                                                                         1.07
                                                                          „„ U.S. inflation (Mar 1), jobs (Mar 10) data critical
 economy’s promising start to the year which keeps pressure on
 the Federal Reserve to raise interest rates.                             „„ Ides of March: Fed decision Mar 15
                                                                                                                                                         1.03
 „„ U.S. data delight on jobs, inflation and retail spending                                                                                                    F   M    A   M    J   J    A   S   O    N    D      J      F

 „„ Will the US administration pursue a weaker dollar policy to                                                                                                                                         Source: Reuters, 2017
    shrink the trade gap?
 „„ Market sees low but rising risk of an imminent U.S. rate hike                                                                                        ECONOMIC DATA
                                                                                                                                                                    „„ Base Rate:                      0.50-0.75%
                                                                                                                                                                    „„ Annual GDP:                      1.9% (Q4)
 MARCH2017 EVENTS                                                                                                                                                   „„ Annual Inflation:                1.7% (Dec)

     Mar 1                                      Mar 10                                                                                    Mar 30                    „„ Unemployment:                    4.8% (Jan)
     Consumer Spending,                         Nonfarm Payrolls,                                                                         Q4 GDP Final
                                                                                                                                                                    „„ Trade Balance:                       -$44.3b
     Inflation                                  Unemployment

     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
                                  Mar 7                             Mar 15
                                  Trade                             FOMC
                                  Deficit                           Decision

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CAD
 JOE MANIMBO, CURRENCY STRATEGIST – NORTH AMERICA

 February review
                                                         CURRENCY OUTLOOK
                                                         CANADA

 The loonie pared a year-to-date gain against the U.S. dollar as
 market focus shifted increasingly towards the outlook for global
                                                                        March risk events and key themes
                                                                        The loonie has held firm in recent months, a gain that hasn’t
                                                                        gone unnoticed at the Bank of Canada which considers its rise
 monetary policy. Few major currencies can compete against the          a risk to the economy’s export-led recovery. Canada’s currency           USD/CAD (12 MTH)
 U.S. dollar when the topic turns to interest rates. That’s because     is poised to receive an early month cue when the BOC issues a
 the Fed has raised rates twice since late 2015 and plans more          policy decision on March 1.                                               1.40
 increases in the year ahead. Canada, meanwhile, is not expected        Central bankers are not expected to alter their record low rate
 to follow in America’s higher rate footsteps for a while yet,          of 0.50 percent over the foreseeable future, a steady outlook             1.35
 particularly after Canadian consumer spending unexpectedly             that leaves the loonie vulnerable as the debate intensifies for
 shifted into reverse in December.                                      the Fed to raise rates to put a lid on rising inflation expectations.     1.30
 „„ Oil steadied around $50, underpinning commodity currencies          The answers to the following questions should be of critical
 „„ Trudeau-Trump White House summit suggested ‘tweaks’                 importance to the loonie’s coming prospects:
                                                                                                                                                  1.25
    to trade deals                                                      „„ Will the Bank of Canada let the doves or hawks loose?                         F   M    A   M    J   J    A   S   O    N    D      J      F

 „„ USDCAD started 2017 above 1.34                                      „„ Is Canada’s hiring spree sustainable?                                                                                 Source: Reuters, 2017

                                                                        „„ How long will oil keep above $50?
                                                                                                                                                 ECONOMIC DATA
                                                                                                                                                             „„ Base Rate:                            0.50%
                                                                                                                                                             „„ Annual GDP:                      3.5% (Q3)
 MARCH2017 EVENTS                                                                                                                                            „„ Annual Inflation:                1.5% (Dec)

     Mar 1                                  Mar 10                                                                                                           „„ Unemployment:                    6.8% (Jan)
     Bank of Canada                         Employment
                                                                                                                                                             „„ Trade Balance:                    +C$0.92b
     Decision

    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
                               Mar 7
         Mar 2                 Trade                                                                      Mar 24
         Q4 GDP                Balance                                                                    Inflation

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GBP                                                       CURRENCY OUTLOOK
                                                          UNITED KINGDOM
 JOHN MARLEY, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA

 February review
 GBPUSD traded sideways through February as the Brexit bill sailed
 smoothly through Parliament on its way to the House of Lords,
                                                                         March risk events and key themes
                                                                         We have PMIs within the first few days, most likely followed
                                                                         by a triggering of Article 50. We see only a small kneejerk
 where it also passed on to committee stage at the end of the            lower for GBP on this event. The Fed will meet on the 15th        GBP/USD (12 MTH)
 month. Economic data was reasonable although house prices, a            of the month, with MPC the next day. If the Fed announce a
 bell weather for UK growth, show negative reactions to new tax          hike, GBPUSD is likely to test the downside, as MPC keep
                                                                                                                                            1.44
 treatment and a possible Brexit effect. GBPEUR rallied into the end     rates unchanged. GBPEUR could see an initial rally from either
 of the month as strains within Europe, and and an unpredictable         higher US rates, or even more favourable polling for Le Pen
                                                                                                                                            1.36
 outlook for the French election, weighed on Euro.                       ahead of the French elections.

                                                                                                                                            1.28

                                                                                                                                            1.20
                                                                                                                                                   F   M    A   M   J   J   A   S   O    N    D      J      F

                                                                                                                                                                                         Source: Reuters, 2017

                                                                                                                                           ECONOMIC DATA
                                                                                                                                                       „„ Base Rate:                          0.25%
                                                                                                                                                       „„ Annual GDP:                           1.8%
 MARCH2017 EVENTS                                                                                                                                      „„ Annual CPI:                           1.8%

         Mar 2                                                     Mar 15                                                                              „„ Unemployment:                         4.8%
         UK Manufacturing                                          Federal Reserve meeting on
                                                                                                                                                       „„ Trade Balance:                     £-10.9b
         PMI data                                                  Interest Rates & Monetary Policy

    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
              Mar 3                                                    Mar 16
              UK Services                                              MPC Meeting on Interest Rates
              PMI data                                                 & Monetary Policy

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CURRENCY OUTLOOK
                                                           EURO ZONE
 GUILLAUME DEJEAN, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA

 February Review                                                            March risk events and key themes
 The significant upturn of the euro in early 2017 finally expired           The degree of concern ahead of the French election will be a
 and did not reach February. Europe is back in the spotlight after          compass for the euro. Increased odds of a of a Marine Le Pen
 new concerns about the health of Greece, and the upcoming                  victory in May could push the euro south. Inversely, the euro
                                                                                                                                                      GBP/EUR (12 MTH)
 French election scheduled for spring.                                      could go north if hype around her candidacy weakens. Strong
 „„ The 3-month implied volatility on the EUR/USD rate spiked to            results for the far-right Dutch party during the parliamentary
                                                                            election on March 15 could fuel the rise of populist sentiment             1.30
    a two-month high as political uncertainties intensified
                                                                            ahead of the French elections. While Eurozone fundamentals
 „„ No deal has been signed between creditors, IMF officials and            significantly improved in recent months (strong PMI surveys and            1.23
    the Greek government regarding terms of a new €86Bln                    a spike in headline inflation), tapering debate could resume and
    bail-out program                                                        boost the euro if the ECB decide to revise its economic forecast
                                                                                                                                                       1.16
 „„ The euro declined against all of its G10 peers this month,              during the March meeting.
    except the SEK (as of February 20th)                                    „„ Mario Draghi downplayed an early tapering scenario from the
                                                                                                                                                       1.09
                                                                               ECB ahead of the French and German elections                                   F   M    A    M     J   J   A   S   O    N    D      J      F
                                                                            „„ No political party wishes to build a coalition with the far-right
                                                                                                                                                                                                       Source: Reuters, 2017
                                                                               candidate Geert Wilders, hence the low risk potential that he
                                                                               will become the next Dutch PM
                                                                            „„ The Eurozone PMI survey almost reached a six year high,
                                                                                                                                                      ECONOMIC DATA
                                                                               while headline inflation accelerated in January to its highest
                                                                               annualized pace since February 2013 at 1.8%.                                       „„ GDP:                                     1.7%

 MARCH2017 EVENTS                                                                                                                                                 „„ Inflation:               1.8% (annualized)
                                                                                                                                                                  „„ Unemployment:                            9.6%
                                        Mar 9
         Mar 2                          - ECB rating decision                                                 Mar 24                                              „„ Trade Balance:                    €28.1Mds
         Flash Inflation rate (Feb)     Mar 9-10                                                              Flash PMI survey
                                        - European Council
                                                                                                                                                                  „„ Policy rates:                            0.0%
         & Unemployment rate

    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
                                                                     Mar 15                                                        Mar 31
              Mar 3                                                  Dutch                                                         Flash inflation
              Retail sales                                           parliamentary election                                        rate (March)

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CHF                                                      CURRENCY OUTLOOK
                                                         SWITZERLAND
 JOHN MARLEY, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA

 Febraury review
 We have seen a slow and gradual decline in EURCHF, almost
 certainly a result of continuous intervention by SNB to keep the
                                                                       March risk events and key themes
                                                                       The SNB meet the same day as the UK’s MPC and the Bank of
                                                                       Japan, and the day after the FOMC. The prospect of higher rates
 CHF from strengthening further. It has even been suggested            from the US may give some relief, although it may also trigger          GBP/CHF (12 MTH)
 that to find the extra liquidity needed they may have been active     unwanted EUR weakness that requires more ongoing support in
 in the two separate markets, EURUSD and USDCHF, accounting            the market. With rates so far into negative territory already, it is     1.43
 for the resilience of the EUR that some find hard to explain.         hard to imagine the SNB cutting even further.
 Overall, data has been as forecast, with another increase in
                                                                                                                                                1.35
 reserves manifesting itself due to those Central Bank actions.

                                                                                                                                                1.27

                                                                                                                                                1.19
                                                                                                                                                       F   M    A   M   J   J   A   S   O    N    D      J      F

                                                                                                                                                                                             Source: Reuters, 2017

                                                                                                                                               ECONOMIC DATA
                                                                                                                                                           „„ Base Rate:                         -0.75%
                                                                                                                                                           „„ Annual GDP:                           1.3%
 MARCH2017 EVENTS                                                                                                                                          „„ Annual CPI:                           0.3%
                                                                     Mar 16                                                                                „„ Unemployment:                         3.3%
                                                                     - SNB Rates and Monetary Policy
                                                                     - BoJ Rates and Monetary Policy                                                       „„ Trade Balance:                 4.7b (CHF)
                                                                     - MPC Meeting on Interest Rates & Monetary Policy
    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
                                                                 Mar 15
                                                                 Federal Reserve meeting on
                                                                 Interest Rates & Monetary Policy

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AUD
 STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC

 February review
                                                        CURRENCY OUTLOOK
                                                        AUSTRALIA

 The Australian dollar continued higher in February boosted
 by a strong improvement in the Australian trade position. The
                                                                        March risk events and key themes
                                                                        Looking forward, markets are hoping for a significant
                                                                        improvement in Australia’s growth position after the September
 Australian trade surplus was reported as the highest-ever in           quarter saw a shock negative read.                                   AUD/USD (12 MTH)
 February at AUD3.5 billion thanks to rising commodity prices.          An improvement in trade and business confidence should see
                                                                                                                                              0.79
 „„ The AUD climbed to three-month highs versus the USD                 the Australian economy return to growth.
    but was troubled around the 0.77 level, a major trading             „„ This month, the focus will be on December quarter GDP, due
    zone that has hampered gains for more than a year                                                                                         0.76
                                                                           on 1 March. Last quarter saw a 0.5% fall
 „„ The AUD saw strong gains versus other major currencies
                                                                        „„ The performance of commodity markets will be closely
    with the Aussie nearing four-year highs versus the euro                                                                                   0.73
                                                                           watched. In particular, iron ore has been driven by strong
    and three-year highs against the British pound                         gains in the Chinese market. While physical demand has
 „„ The jump in iron ore prices continued in February and these            increased, so has speculative activity                             0.70
                                                                                                                                                     F   M    A   M   J   J   A   S   O    N    D      J      F
    gains remain the key driver of the AUD’s strength. Iron ore         „„ The new Reserve Bank of Australia governor, Philip Lowe, has
    gained 20% in the first two months of the year                         recently indicated a growing concern about financial stability                                                  Source: Reuters, 2017

                                                                           driven by the strong gains in the housing market. This makes
                                                                           further rate cuts less likely                                     ECONOMIC DATA
                                                                                                                                                         „„ Base Rate:                          1.50%
                                                                                                                                                         „„ Annual GDP:                         1.80%
 MARCH2017 EVENTS                                                                                                                                        „„ Annual CPI:                         1.50%

     Mar 1                Mar 6                                     Mar 16                 Mar 21                                                        „„ Unemployment:                       5.70%
     GDP                  Retail                                    Employment             RBA
                                                                                                                                                         „„ Trade Balance:                 3.5b (AUD)
                          Sales                                                            Minutes

    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
                              Mar 7
         Mar 2                RBA
         Trade Balance        Decision

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JPY
 The Japanese currency continues to be driven by the
                                                         CURRENCY OUTLOOK
                                                         JAPAN
 GUILLAUME DEJEAN, CURRENCY STRATEGIST – EUROPE, MIDDLE EAST, AFRICA

 March risk events and key themes

 worldwide political environment. The revival of optimism in
                                                                       What to expect in March 2017?
                                                                       Unsurprisingly the future of the yen will be linked to the risk-
                                                                       appetite of global investors in the current political climate. The
 the United States, and the relatively upbeat tone of the first        USD/JPY story is strongly linked to the activities of the American     GBP/JPY (12 MTH)
 meeting between the new US Government and Abe, dented                 government. The EUR/JPY rate looks shaky in the face of the
 the yen’s rally against the USD. Nevertheless, the temporary          upcoming French election, the official start of ‘Brexit’ and the
 desynchronization of political risks between the US and Europe        Dutch parliamentary election scheduled for March 15.                    164
 following the Eurosceptic manifesto of far-right candidate Marine     „„ Markets will be waiting for the American tax reform plan in
 Le Pen, resulted in a new uptrend of the USD/JPY rate but                March. Few details have leaked so far
                                                                                                                                               151
 anchored the EUR/JPY rate at a 2017 low.
                                                                       „„ The Dutch parliamentary election will be of interest to              138
 „„ The USD/JPY hit a two-month lows on Feb 07 and tested the             investors in the lead up to the French elections
    ¥111,6 technical support before recovering above ¥114
                                                                       „„ The BoJ signaled they did not intend to modify the “yield            125
 „„ The EUR/JPY returned to its ¥119.5 support level in late                                                                                         F   M    A    M     J   J   A   S   O    N    D      J      F
                                                                          curve control” policy because of a rise of global interest rates
    February on the back of French political concerns                                                                                                                                         Source: Reuters, 2017

                                                                                                                                              ECONOMIC DATA
                                                                                                                                                         „„ GDP:                     1.0% (annualized)

 MARCH2017 EVENTS                                                                                                                                        „„ Inflation:               0.3% (annualized)
                                                                                                                                                         „„ Unemployment:                            3.1%
             Mar 3                          Mar 10                   Mar 16
                                                                                                                                                         „„ Trade Balance:                    ¥1087Mds
             Inflation                      Q1 Tankan                BoJ
             rate                           Survey                   decision rate                                                                       „„ Policy rates:                           -0.1%
    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
                                   Mar 8                         Mar 15                                    Mar 29
                                   Final                         Dutch                                     Unemployment rate /
                                   Q4 2016 GDP                   parliamentary election                    Retail sales
                                                                 & Fed rate decision

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CNY
 STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC

 February review
                                                         CURRENCY OUTLOOK
                                                         CHINA

 The Chinese currency has recently strengthened after falling
 at the start of the year to the lowest level versus the US dollar
                                                                         March risk events and key themes
                                                                         The FX oversight measures introduced by China have halted the
                                                                         CNY’s depreciation but the effects might only be temporary. This
 since 2008. The CNY’s losses have recently abated as the                month, focus will remain on the CNY. Any move from the US Federal
                                                                                                                                               USD/CNY (12 MTH)
 Chinese government looks to control the weight of CNY selling.          Reserve to indicate it plans to soon raise rates could see the CNY
 „„ The Chinese government has stipulated that international banks       heavily sold against the US dollar.
    balance FX flows and restricted large corporate investments          „„ Most activity indexes have improved over the last six months.       6.86

 „„ The CNY has seen volumes collapse as the Chinese                        The Chinese government has boosted growth via new loans.
    government attempts to curb speculative activity and                    There are growing concerns about the growth of leverage             6.72

    capital outflows                                                     „„ Inflation continues to run hot. The most recent producer
                                                                            prices reading climbed to the highest level in five years.          6.58
 „„ The CNY has also seen gains versus other currencies, with
    the largest improvement against the euro and Japanese yen               Further gains in inflation could complicate the POBC’s
                                                                            management of the Chinese economy                                   6.44
                                                                                                                                                       F   M    A   M   J   J   A   S   O    N    D      J      F
                                                                         „„ The new US administration remains focused on the Chinese
                                                                            currency with increasing speculation that US Congress might                                                      Source: Reuters, 2017
                                                                            name China as a “currency manipulator” over the course of
                                                                            the month
                                                                                                                                               ECONOMIC DATA
                                                                                                                                                           „„ Base Rate:                          4.35%
                                                                                                                                                           „„ Annual GDP:                         6.80%
 MARCH2017 EVENTS                                                                                                                                          „„ Annual CPI:                         2.50%

     Mar 1                         Mar 8                     Mar 14                                                                                        „„ Unemployment:                       2.50%
     Manufacturing                 Trade                     - Retail Sales
                                                                                                                                                           „„ Trade Balance:                51.4b (USD)
     PMI                           Balance                   - Industrial Output

    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

                                        Mar 9
                                        CPI

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NZD
 STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC

 February review
 The NZDUSD was weaker last month as the Reserve Bank of
                                                           CURRENCY OUTLOOK
                                                           NEW ZEALAND

 New Zealand’s most recent policy statement hit confidence. The
                                                                            March risk events and key themes
                                                                            The sharp rise in NZ inflation was the key shift for the NZD over
                                                                            the last month and sustained gains will have a major effect on
 RBNZ kept rates on hold and indicated that while it was more               interest rate expectations.                                          NZD/USD (12 MTH)
 positive on the inflation outlook it was unlikely to move rates in
                                                                            „„ The rise in inflation has seen interest rate markets turn. The
 the near term.                                                                                                                                   0.74
                                                                               bond market now expects a rate hike by November 2018
 „„ The RBNZ’s news saw NZD lower versus most currencies
                                                                            „„ The NZD remains buoyant versus low yielding currencies like        0.71
    with the largest losses against the US and Australian dollars
                                                                               the euro, Japanese yen and Swiss franc. However, any move
 „„ The RBNZ upgraded its expectations for the official interest               to raise rates by the US Federal Reserve could trigger
                                                                                                                                                  0.68
    rates with the bank now expecting the next move to be higher.              a reversal in this trend
    However, the RBNZ said it’s unlikely to move before 2019
                                                                            „„ Most market analysts expect the NZDUSD to fall over the
                                                                                                                                                  0.65
 „„ The NZD was also hit by the RBNZ’s warning that the                        next year. The latest forecast poll from Reuters, published               F   M    A   M   J   J   A   S   O    N    D      J      F
    local currency was too high and that current levels were                   on 7 February 2017, found the median 12-month forecast
                                                                                                                                                                                               Source: Reuters, 2017
    unsustainable for “moderate” growth                                        for NZDUSD is 0.6900

                                                                                                                                                 ECONOMIC DATA
                                                                                                                                                             „„ Base Rate:                          1.75%
                                                                                                                                                             „„ Annual GDP:                         3.50%
 MARCH2017 EVENTS                                                                                                                                            „„ Annual CPI:                         1.30%

     Mar 1                          Mar 8                                                           Mar 22                                                   „„ Unemployment:                       5.20%
     Terms of Trade                 Dairy                                                           Dairy
                                                                                                                                                             „„ Trade Balance:                -3.2b (NZD)
                                    Prices                                                          Prices

    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

                       Mar 5                                          Mar 15                                 Mar 24
                       Building Consents                              Current Account                        Trade Balance

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SGD
 STEVEN DOOLEY, CURRENCY STRATEGIST – ASIA PACIFIC

 February review
                                                           CURRENCY OUTLOOK
                                                           SINGAPORE

 The Singapore dollar continued to hold steady in February after
 losing ground substantially in the later part of 2016.
                                                                         March risk events and key themes
                                                                         A pick-up in inflation and growth in Singapore has helped the
                                                                         island-state’s economy but it remains below capacity. From
 An improvement in global economic indicators and an easing in           this perspective, April’s meeting of the Monetary Authority of      USD/SGD (12 MTH)
 the US dollar were the main reasons for the SGD’s support.              Singapore will be critical.
                                                                                                                                              1.48

 „„ The USD eased as markets worried about the detail of the             „„ The recent improvement in commodity prices, especially oil,
    US administration’s tax package. This saw the USDSGD fall               has helped the Singapore dollar. Commodity prices will be
                                                                                                                                              1.43
    to three-month lows during the month                                    closely watched

 „„ The ongoing weakness in low-yielding currencies saw both             „„ The meeting of the US Federal Reserve, due on 16 March,
                                                                                                                                              1.38
    the Japanese yen and euro weaker. The euro fell to six-month            will be critical. Any indication of impending rate hike could
    lows versus the Singapore dollar                                        see the US dollar stronger and the SGD weaker
                                                                                                                                              1.33
 „„ The SGD’s relative strength saw the local currency rise to           „„ The Monetary Authority of Singapore is next scheduled to                 F   M    A   M   J      J   A   S   O    N    D      J      F
    all-time highs versus the Malaysian ringgit                             meet in mid-April. With inflation still below target, there
                                                                                                                                                                                              Source: Reuters, 2017
                                                                            remains the potential for an SGD devaluation

                                                                                                                                             ECONOMIC DATA
                                                                                                                                                         „„ SIBOR:                                 0.97%
                                                                                                                                                         „„ Annual GDP:                            2.90%
 MARCH2017 EVENTS                                                                                                                                        „„ Annual CPI:                            0.20%

             Mar 3                          Mar 10                                                    Mar 23                                             „„ Unemployment:                          1.80%
             Manufacturing                  Retail Sales                                              CPI
                                                                                                                                                         „„ Trade Balance:                    1.4b (SGD)
             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

                                                                           Mar 17
                                                                           Exports

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MXN
 JOSEPH BRUCKER, CURRENCY STRATEGIST – EMERGING MARKETS

 Febraury review
 The peso bolstered to back below 20 against the mighty
                                                         CURRENCY OUTLOOK
                                                         MEXICO

 greenback for the first time since the U.S. presidential election
                                                                       March risk events and key themes
                                                                       The same factors that affected the peso in February will
                                                                       continue to be in the driver’s seat for March. The U.S. President
 this month. This stemmed from three factors. First, Banxico           has his State of the Union address, various pieces of economic        USD/MXN (12 MTH)
 (Mexico’s Central Bank) hiked its keystone rate by 50 basis           data will be released, the FX commission’s currency hedging
                                                                                                                                               22.0
 points. Secondly, the FX commission proposed a strong                 program and its efficacy will be colored, and Banxico meets on
 currency hedge program valued at $20 billion U.S. dollars. The        the 30th. If March is anything like the preceding 3 months, we
                                                                                                                                              20.75
 last major factor was a softening tone from the U.S. presidential     could see some big swings, particularly against the U.S. dollar.
 administration regarding NAFTA negotiations. The latter is in         „„ U.S. – Mexico relations in focus                                     19.5
 stark contrast to early concerns, which allowed for the dramatic
 shift of nearly 5% to date against the U.S. dollar.                   „„ Currency Hedging program in action                                 18.25

 „„ Banxico pumps up rates by half a percent                           „„ Banxico meets at the end of the month
                                                                                                                                               17.0
 „„ FX commission announces major currency hedging program                                                                                            F    M    A   M     J   J   A   S   O   N     D      J     F

 „„ U.S. softens anti-NAFTA rhetoric                                                                                                                                                          Source: Reuters, 2017

                                                                                                                                             ECONOMIC DATA
                                                                                                                                                          „„ Annual GDP:                           2.38%
                                                                                                                                                          „„ Inflation:                            4.20%
 MARCH2017 EVENTS                                                                                                                                         „„ Unemployment:                           3.4%

     Mar 1                   Mar 6                                                                                                Mar 30                  „„ Trade Balance:                       $28MM
     - Remittances           Consumer                                                                                             Banxico
                                                                                                                                                          „„ Policy Rates:                         6.25%
     - Quarterly Inflation   Confidence                                                                                           Meeting

    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
               Mar 3
               Gross Fixed                Mar 9
               Investment                 Inflation

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BRL
 JOSEPH BRUCKER, CURRENCY STRATEGIST – EMERGING MARKETS

 February review
                                                             CURRENCY OUTLOOK
                                                             BRAZIL

 The real gained over 3% against the dollar, reaching its lowest
 rate in nearly 2 years this month. This was fueled by two major
                                                                             March risk events and key themes
                                                                             The next expected rate cut is in April by 75 basis points,
                                                                             and any big news in March could corroborate or derail those
 factors: COPOM (Brazilian Central Bank) dovishness, and                     expectations. The COPOM has stated that inflation and supply          USD/BRL (12 MTH)
 a potentially friendlier U.S. presidential administration than              shocks, particularly in consumer goods such as food, color the
 anticipated. The COPOM cut the primary SELIC rate by 75 basis                                                                                      4.00
                                                                             aggressiveness of the rate cut depth and pace of 2017. Banks
 points to 12.25%, with increasing room for more dovishness.                 seem to have a consensus that inflation will converge with its
                                                                                                                                                    3.75
 In the accompanying thoughts and justification, COPOM cited                 target, and the risk of food supply shocks are minimal. As such,
 favorable inflation figures and potentially slower economic                 the widespread consensus is that Brazil will see increasingly          3.50
 activity. They also left the door open to more rate cuts this year,         aggressive rate cuts throughout 2017.
                                                                                                                                                    3.25
 and more often. The U.S. executive branch also bolstered the                „„ The market is expecting a 75-basis point cut in April
 real, as speculation over weak-dollar policies and a potential
                                                                             „„ Inflation reports will be flashpoints                               3.00
 more importer-friendly approach was substantiated by various                                                                                              F   M    A   M      J   J   A   S   O    N    D      J      F
 statements and leaks throughout the month.                                  „„ Elucidated trade policy could steer further USDBRL price shifts
                                                                                                                                                                                                    Source: Reuters, 2016
 „„ The Brazilian real appreciated to 20-month lows against
    the greenback                                                                                                                                  ECONOMIC DATA
 „„ The main rate was cut by 75 basis points

 „„ Trade partner political uncertainty slightly softened fears                                                                                                „„ Annual GDP:                            1.82%
                                                                                                                                                               „„ Inflation:               5.35% (annualized)
 MARCH2017 EVENTS                                                                                                                                              „„ Unemployment:                          12.4%

              Mar 3                           Mar 10                                                      Mar 23                                               „„ Trade Balance:                    2.7b (USD)
              Manufacturing                   Retail Sales                                                CPI
                                                                                                                                                               „„ Policy Rates:                         12.25%
              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

                                                                               Mar 17
                                                                               Exports

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DISCLAIMERS

 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
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 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
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 © 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”).
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                                                                                               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
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                                                                                               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
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DISCLAIMERS

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 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).
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