Each week our Sales Manager Jorn Andriessen will be giving us a snapshot update of the highs and lows of the foreign exchange market. If you would like any further information, please email Jorn@airwallex.com
The US's Federal Reserve System (FED) rate hike came and went last week. The FED announcement indicated no more than a further two interest rate hikes this year. Both bonds and the AUD/JPY cross is a very good barometer of how healthy the market perceives this risk.
The AUD is a commodity-backed currency whilst the YEN has been the currency of choice for the 'carry trade' whereby traders borrow a cheap currency (the YEN with its long standing negative rates) and invest in risk elsewhere.
If/when the YEN makes a substantial rise higher it bodes ill for risk. This is especially true if it moves aggressively higher against the AUD which as an exporter of natural resources will bear the brunt of any economic slowdown.
Finally, the Bloomberg Dollar Index lost 0.1 percent as it heads for a weekly slide of 0.7 percent it eked out a gain to snap a six-day losing streak.
How the markets are looking
AUD: The AUD fell strongly against the USD last week. There is no data for the AUD this week.
USD: The US$ Index closed substantially lower last week.
On Tuesday we have Consumer Confidence which is thought to fall from 114.8 to 113.9.
On Wednesday we have Crude Oil Inventories.
Thursday will see the usual Unemployment Claims figure estimated to be 244,000 from the previous 261,000.
We have the GDP number expected to rise to 2.0% from 1.9%.
EURO: The EURO rose against the USD last week. On Monday we have the German Business Climate number thought to be 111.2 from 111.0.
GBP: The GBP closed slightly higher against the USD last week. Only one item for the GBP which is the Current Account number on Friday expected to be -16.3B from -25.5B.
CNY: On Thursday we have both manufacturing PMI and Non-Manufacturing PMI. The former is expected to rise from 51.6 to 51.7.
YEN: The YEN rose again against the USD last week. On Thursday we have Household Spending which is anticipated to fall from -1.2% to -1.6%.