Investors Buy Out Franc and Yen (Weekly Review)

2018-09-03
Last week macroeconomic statistics, and in particular data on consumer inflation in Germany, Eurozone and Japan, as well as U. S. GDP data, had no significant impact on the foreign exchange market. Inflation in the above countries/region generally remains low, which gives no grounds to expect any increase in interest rates from the European Central Bank and the Bank of Japan, but expectations of the beginning of the curtailment of ECB stimulating measures this autumn provided moderate support to the single European currency, which, paired with the U. S. dollar, managed to update the corrective maximum. 

The topic of trade wars unleashed by the United States with its major trading partners, along with the crisis in Turkey and Argentina, dominated last week. The President of Turkey is actively encouraging the population to get rid of U. S. Dollars, but his efforts have not led to reversal of the trend in the Turkish lira, and the Argentine Central Bank has resorted to unprecedented measures to restrain insane inflation by raising the interest rate up to 60%. Despite all the above, last week investors preferred to go into "safe haven" assets, buying, among other assets, the Swiss Franc and the Japanese Yen, against which the U. S. Dollar was under the pressure of these currencies. 

In addition to these factors, investors' attention was focused on the US negotiations with Mexico and Canada. Quite rapid and successful conclusion of negotiations with Mexico gave hope for the same "blitzkrieg" in negotiations with Canada, but by the end of the week no progress had been achieved, and the Canadian dollar, after uncertain attempts to continue its growth, was again under pressure, which forced it to lose some of its achievements. The differential of interest rates will continue to support the U. S. Dollar. Due to trade wars and sanctions imposed against a number of countries, it may be subject to a larger sale, but in a more distant future. 

The schedule for this week:  

Monday, September 3 

10:55 (07:55 GMT) – Germany. Markit Manufacturing Purchasing Managers Index (PMI); 
11:00 (08:00 GMT) - Germany. Markit Manufacturing Purchasing Managers Index (PMI); 
11:30 (08:30 GMT) – United Kingdom. Markit Manufacturing Purchasing Managers Index (PMI); 

USA – Labor Day. 

Tuesday, September 4 

07:30 (04:30 GMT) – Australia. Reserve Bank of Australia Interest Rate Decision;
07:30 (04:30 GMT) - Australia. Reserve Bank of Australia Rate Statement;  
10:15 (07:15 GMT) – Switzerland. Consumer Price Index (CPI); 
12:30 (09:30 GMT) - Australia . Reserve Bank of Australia Governor Lowe Speaks; 
15:15 (12:15 GMT) – United Kingdom. Inflation Report Hearings; 
16:45 (13:45 GMT) – USA. Markit Manufacturing Purchasing Managers' Index (PMI); 
17:00 (14:00 GMT) – USA. ISM Prices Paid Index;  
17:00 (14:00 GMT) – USA. ISM Manufacturing Purchasing Managers Index (PMI).  

Wednesday, September 5 


04:30 (01:30 GMT) – Australia. Gross Domestic Product (GDP);  
04:45 - (01:45 GMT) – PRC. Caixin Services Purchasing Managers Index (PMI);  
10:55 (07:55 GMT) – Germany. Markit Composite Purchasing Managers Index (PMI);  
10:55 (07:55 GMT) – Germany. Markit Services Purchasing Managers Index (PMI);  
11:00 (08:00 GMT) – Eurozone. Markit Composite Manufacturing Purchasing Managers Index (PMI);  
11:00 (08:00 GMT) - Eurozone. Markit Composite Services Purchasing Managers Index (PMI); 11:30 (08:30 GMT) – United Kingdom. Markit Services Purchasing Managers Index (PMI);  
12:00 (09:00 GMT) – Eurozone. Retail Sales; 15:30 (12:30 GMT) – USA. Trade Balance; 
15:30 (12:30 GMT) – Canada. Import/Export; 15:30 (12:30 GMT) – Canada. Trade Balance; 15:55 (12:55 GMT) – USA. The Redbook Index; 17:00 (14:00 GMT) – Canada. Bank of Canada (BOC) Interest Rate Decision; 
17:00 (14:00 GMT) – Canada. Bank of Canada (BOC) Rate Statement.  

Thursday, September 6 

02:50 (23:55 GMT) – Japan. Foreign Investments in Japanese Stocks; 
02:50 (23:55 GMT) – Japan. Foreign Bonds Buying; 04:30 (01:30 GMT) – Australia. Trade Balance; 
04:30 (01:30 GMT) – Australia. Import/Export; 08:45 (05:45 GMT) – Switzerland. Gross Domestic Product (GDP);  
09:00 (06:00 GMT) – Germany. Factory Orders; 
15:15 (12:15 GMT) – USA. ADP Nonfarm Employment Change;  
15:30 (12:30 GMT) – USA. Initial Jobless Claims;  
17:00 (14:00 GMT) – USA. Factory Orders;  
17:00 (14:00 GMT) – USA. ISM Services Purchasing Managers Index (PMI);  
19:30 (16:30 GMT) – Switzerland. Swiss National Bank Governor Board Member Zurbrugg Speaks. 

Friday, September 7 

01:30 (22:30 GMT) – Australia. AIG Construction Index; 
04:30 (01:30 GMT) – Australia. Home Loans; 09:00 (06:00 GMT) – Germany. Trade Balance; 09:00 (06:00 GMT) – Germany. Import/Export; 09:00 (06:00 GMT) – Germany. Industrial Production; 
12:00 (09:00 GMT) – Eurozone. Gross Domestic Product (GDP);  
15:30 (12:30 GMT) – USA. Nonfarm Payrolls; 
15:30 (12:30 GMT) – USA. Unemployment Rate;  
15:30 (12:30 GMT) – USA. Average Hourly Earnings;  
15:30 (12:30 GMT) – Canada. Unemployment Rate; 15:30 (12:30 GMT) – Canada. Employment Change; 
17:00 (14:00 GMT) – Canada. Ivey Purchasing Managers Index (PMI).

Author: Anthony Porter, IAFT Analyst

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