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US Dollar (USD) Awaits Yellen Speech, ?Loonie? (CAD) Falls, ?Kiwi? (NZD) Popular

Published: 14 Jul at 12 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, France, Germany, Japan, South Africa, Portugal,

British Pound (GBP)

In a quiet day by way of UK data on Monday, the Pound is currently trading lower at 1.7113 against the US Dollar after a poor performance for UK figures last week. Tuesday will be an influential day for Sterling with the UK Consumer Price Index released, along with the Core Consumer Price Index and the Producer Price Index. However, with the Pound still trading in the currency market strongly, businesses fear for their profits with more gains forecast. An expert in the field, Simon French, commented: ‘We expect Sterling to sustain its recent gains and to appreciate further in the coming months.’

Euro (EUR)

Last week the Euro came under pressure when one of Portugal’s biggest banks—Banco Espirito Santo—failed to make a debt payment. However since then German Chancellor, Angela Merkel, has highlighted that the Portugal incident is an example of how fragile the Euro and the economy are within the Eurozone. Merkel stated: ‘The example of a Portuguese bank showed us in the last few days how quickly the so-called markets are roiled, how quickly uncertainty returns.’ Tuesday will see the release of the Eurozone Industrial Production data, which is currently forecast to fall from 1.4% to an unfavourable 0.5% YoY which could weaken the Euro further.

US Dollar (USD)

The US Dollar will experience an influential day on Tuesday as chairwoman for the Federal Reserve, Janet Yellen, will give the Semi-Annual Testimony to the Senate Committee, which will hopefully cast some light on the US interest rate hike speculation. In anticipation of Yellen’s speech, the US Dollar is currently trading within a 0.3% proximity from its lowest level in nearly two months against the Japanese Yen. Currency expert Jim Vrondas speculated: ‘The tone from Yellen will start to change probably in the next quarter but not yet. If Yellen remains dovish any rally in Dollar-Yen may be an opportunity to sell it.’

Canadian Dollar (CAD)

The Canadian Dollar saw disappointment on Friday when the Canadian Employment data proved a huge disappointment. The Net Change in Employment data showed -9.4K in June, falling dramatically from the previous 25.8K in May, and completely bypassing forecasts of the creation of 20.0K jobs. Unemployment rate also grew from 7.0% to 7.1%, which combined with the new jobs data caused a softening of the ‘Loonie’. However with the Bank of Canada looking to pull down their currency to make their exports more competitive, the latest job data may have done that for them with the Canadian Dollar falling from the 94 cents region, to the very low 0.9305 position against the US Dollar.

Australian Dollar (AUD)

Monday sees the Australian Dollar on the precipice of the 94 US cents threshold, after Portugal fears are quelled. However economists are predicting the ‘Aussie’ will plummet to its lowest level in five years, a fall of over 8% to approximately 86 cents against the US Dollar in 2015. The downfall of the ‘Aussie’ will be due to feeble economic growth, and weak household spending. Peter Martin for the Sydney Morning Herald stated: ‘Most of our panel expect the Reserve Bank to sit on its hands for the rest of this year, leaving the cash rate at 2.5%.’ The ‘Aussie’ has a relatively quiet week by way of data this week, lending to other currencies movement to determine its own.

New Zealand Dollar (NZD)

The popular New Zealand Dollar is trading in the region of 0.8812 against the US Dollar on Monday in anticipation of Janet Yellen’s Federal Reserve speech on Tuesday. An expert in the field, Peter Cavanaugh stated: ‘If Yellen comes out with a comment that implies the first Fed funds rate hike might not be until the second half of next year, we’ll probably see US Dollar weakness in the hunt for yield, the “Kiwi” may try at that high.’ New Zealand will see a significant day on Tuesday with the release of their Consumer Price Index, currently forecast to rise from 1.%% to 1.8%.

South African Rand (ZAR)

The Rand is currently trading weaker after NUMSA members have rejected the latest offer from employers, despite stating they would accept the next offer made to end the strike. With fears of recession for South Africa circling the currency market, the Rand will need the work stoppage to conclude soon to gain any stability within its weak economy. A currency expert for the Rand Merchant Bank, John Cairns, stated: ‘The Rand faces risks from numerous central bank events this week but the bias of probabilities is still for dampened range-bound trade.’ With corporate giants such as BMW cancelling expansion plans within South Africa, the recent strikes in 2014 could cause the economy to enter long term fragility.
As of Monday, 14th July 2014, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.2547, GBP USD exchange rate was 1.7089, GBP AUD exchange rate was 1.8189, GBP NZD exchange rate was 1.94, GBP CAD exchange rate was 1.8309, GBP JPY exchange rate was 173.5335, and GBP ZAR exchange rate was 18.2511.
Dominic Lee About Author: (473 Posts)With over ten years experience as an economist – including four years spent as a chief economist with a major currency broker – Dominic has acquired a wealth of knowledge which he uses to forecast market movements. Dominic now works as an independent business advisor and writes for several financial publications.

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