The WEEKLY WRAP Forex Market Analysis: Monday 8TH to Friday 12th August 2016

Overview:

  • Euro is marginally stronger as German GDP flash estimate reported at 0.4% against expectations of just 0.2%.
  • New Zealand Dollar falls further as the manufacturing figures disappoint, though retail sales had been stronger.
  • The U.S. Dollar gives up all of its gains from the previous day.

 

Highlight

US Retail sales unexpectedly dropped to 0% against an expected increase of 0.4% after US consumers cut back on spending for clothing and other goods. This drop puts significant pressure on the FOMC to keep interest rates unchanged when they meet in September. This figure has seen the Dollar aggressively sold as traders look to take profits before the close on Friday.

 

US Dollar

The US Dollar was aggressively sold after a poor retail sales figure that reported 0.0% vs the forecasted 0.4%.  The fact that consumers are not spending has surely now pushed the possibility of a rate hike back to December, or more likely into 2017. If consumers are not spending, it isn’t the right time to increase interest rates and put further pressure on the consumer.

British Pound

Sterling remains weak as we head into the end of another tough week. Sentiment seems to be the main driver of moves in the UK unit. Investors, or traders alike, seem hesitant to hold the currency due to the low yield and uncertainty surrounding the Brexit negotiations that have yet to begin.

Euro

The Euro clawed back its recent losses to end flat for the week as German GDP figures were better than forecast. Higher exports, government spending, and retail sales are cited as the main contributors.  The single currency remains side-lined with the majority of activity in the Sterling crosses. The Euro remains range bound against the Dollar, in the 1.09-1.1300 band.

Canadian Dollar

The Loonie is broadly stronger on the back of higher oil prices. The crude oil price moved higher after Saudi Arabia hinted at a production freeze in order to drive the price higher.

Australian Dollar

The Aussie Dollar is weaker after a disappointing government bond auction overnight. Poor uptake is blamed on weaker global demand and the prospect on further easing by the RBA in the months ahead.

Featured Currency

The South African Rand is heading for its fourth strong, consecutive weekly close as investors flood to emerging markets to find yield.

 

Source: XE

 

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