Currency Market Trend Analysis: August 22, 2017
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By The Numbers: Your FX Week In Review
Currency Calendar
Date | Releases / Holiday | Entity |
---|---|---|
August 22, 2017 | Public Sector Net Borrowing (Jul) | UK |
August 22, 2017 | ZEW Survey - Current Situation/Economic Sentiment (Aug) | Germany |
August 22, 2017 | ZEW Survey - Current Situation/Economic Sentiment (Aug) | EMU |
August 22, 2017 | Retail Sales (Jun) | Canada |
August 22, 2017 | Housing Price Index (Jun) | USA |
August 23, 2017 | Markit PMI Composite (Aug) | Germany |
August 23, 2017 | Markit PMI Composite (Aug) | EMU |
August 23, 2017 | FOMC Member Kaplan Speech | USA |
August 23, 2017 | Markit Manufacturing PMI (Aug) | USA |
August 23, 2017 | ECB President Draghi's Speech | EMU |
August 24, 2017 | Jackson Hole Symposium | USA |
August 24, 2017 | GDP (Q2) | UK |
August 25, 2017 | GDP (Q2) | Germany |
August 25, 2017 | Fed's Yellen Speech | USA |
Upcoming bank holidays and impactful report releases for select countries.
Market Analysis
CAD/USD - Canadian Dollar
Opened last week at 0.7890 and closed at 0.7948.
The CAD rose 0.74% against the USD last week, despite falling oil prices and lower-than-expected Canadian manufacturing sales. This news was balanced by Friday’s CPI data, which increased the likelihood of another rate hike come Autumn. Strong US retail sales figures were a boon to the USD, but positive sentiment has been blunted continued political turmoil within the Trump administration. Markets are progressively losing faith in the Trump administration’s promises of meaningful US fiscal policy reform. I am neutral on CAD/USD for the coming week. It will be a quiet week for the CAD data-wise, and it still seems to be consolidating previous gains.
1. Retail Sales (Jun): Tuesday, August 22.
GBP/USD - British Pound
Opened last week at 1.3010 and closed at 1.2845.
The GBP depreciated 1.27% versus USD last week, after mixed data reduced market expectations for a BoE rate hike. UK wage growth beat expectations (estimated at 2.1%), but is still exceeded by inflation, with real income down 0.5% for the year. Brexit continues to weigh on the GBP, with markets fearing that the UK’s focus on a strong Brexit will delay phase 2 of negotiations until December. The UK released plans for continued trade in goods and services post-Brexit, but the EU has made it clear that trade issues will not be discussed until other issues, including citizens’ rights, are addressed. I am bearish on the GBP/USD in the short-term. UK data has not impressed lately, and Brexit-related concerns are not going anywhere soon.
1. Public Sector Net Borrowing (Jul): Tuesday, August 22.
2. GDP (Q2): Thursday, August 24.
EUR/USD - European Union Euro
Opened last week at 1.1824 and closed at 1.1747.
Over the past week, the Euro depreciated by 0.65% against the USD, despite political turmoil weighing on the Dollar Index. The Jackson Hole Symposium will hold much of the markets’ attention this week; ECB President Draghi is expected to avoid forward guidance during this meeting. Increasing EUR momentum could threaten inflation, and increase the time horizon for QE tapering. By measures of purchasing power parity, the EUR is undervalued against the USD. A slow and steady appreciation is ideal for the EUR right now, and requires careful consideration towards market sentiment. I am bullish on the Euro in the long term, but neutral for this coming week.
1. ZEW Survey - Current Situation/Economic Situation (EMU & Germany, Aug): Tuesday, August 22.
2. Markit PMI Composite (EMU & Germany, Aug): Wednesday, August 23.
3. ECB President Draghi's Speech (EMU, Jul): Wednesday, August 23.
4. GDP (Germany, Q2): Friday, August 25.
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