Market Update 24/06/18

Posted on Posted in Weekly Analysis

This week has seen some strange moves in the markets, but I’ll round up all the Currencies for you all to explain whats happening with them

 

GBP – The Bank of England had there central bank meeting yesterday, the meeting was fairly hawkish, with the market only expected 2 people to vote for a hike, but we actually got 3 who voted for a hike, this shows that the bank could be changing stance and if data produced over the next 2 months is positive then we could see a rate hike in August, so the BoE will be awaiting Inflation and GDP data to improve after a sluggish Q1

EURO – There has been plenty of long term worries for the Euro recently, Politics in Italy and Spain, Germany and Netherlands also stating there intention not to pay more into the EU contribution budget, the currency strength has fallen in recent weeks, the ECB has been hawkish to the markets by removing there QE programme by the end of 2018 – They will e looking at hiking rates in the summer of 2019, They want inflation to rise to there 2% target and with current weakness in the currency this should cause inflation to rise.

CAD – has been weighed down heavily by trade tariffs imposed by the USA and the fact that there is still no NAFTA agreement. Canada ship 75% percent of their exports to the US, so with most of their exports facing bigger charges this could cause US businesses to scale back on ordering in imports from other countries and that would cause a big loss of business for Canada and reducing its GDP income.

USA – USD been a bit sideways this week after a strong move last week after the Fed Reserve has increased expectations of 4 rate hikes in 2018 rather then the 3 already expected. Dollar has broken 95 level on the dollar index before retreating, we look to be forming a higher low on it so another dollar bull run could be coming, the Trade tariffs doesn’t seem to be affecting the dollar but is more affecting US stocks – S&P 500 and the Dow Jones, as these are likely to be affected more. Next level up for the dollar index is  98 as the next area of resistance

CHF and JPY – These have been helped with the ongoing trade wars as they have been used as a safe haven in times of political and economic instability, both these economies are relatively weak but only strengthened on the back of what I call risk aversion. People flock towards safe havens in these times. Both CHF and JPY central banks are very dovish at the moment, so any strength should be short lived. CHF governor Ross Jordan stated yesterday that there currency is too over valued. No signs of interest rate hikes from either

AUD and NZD –

Both have been the biggest losers in the trade disputes going on round the world, these two economies rely on exports as their main source of income, most notably China being there biggest trade partners. With China being hit with tariffs on there exports this could cause them to import less from their main trade partners, these is bringing less confidence in longevity of AUD and NZD economy, outlook looking bleak. Also the dollar strength has seen gold prices weaken off, 2 of AUD and NZD main exports are Gold, so again bringing in less revenue to the economies.