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October 1, 2018

Orbex, Weekly Currency Market Performance and Market Highlights

What were the important market events from last week? Check out the report here.

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This article is originally referred from Orbex Market Analysis.

The AUSD was seen giving up part of the gains last week. The AUD fell 0.62% on the week after logging two weeks of solid gains.

It is likely that the currency posted a pullback and we could expect further gains in the near term.

The CAD was able to rise only 0.15% on the week ending September 28. The slower pace of gains comes for the second week in a row after the currency had previously gained 1.02% in week 37.

The CHF reversed the gains from the previous two weeks. The currency fell 2.37% last week marking a strong decline.

The EUR was down 1.22%. This came after the currency increased 1.06% in week 38. The reversal also erased the gains from week 37.

After rising just 0.07% in week 37, the British pound extended declines the last week. The currency fell 0.39% on the week.

The yen extended declines for the third consecutive week. The declines also increased in momentum as the JPY fell 1.12%

After rising strongly in weeks 37 and 38, the NOK was seen stalling last week. The currency rose just 0.05% last week

The NZD fell 0.80% on the week. This partly reversed some of the gains logged from the week before.

Market Highlights – Last week

US Tariffs

The markets opened on Monday as the new trade tariffs against China came into effect.

The U.S. administration imposed tariffs of 10% on over $200 billion worth of products imported from China.

It included furniture and appliances.

The tariffs are also set to increase to 25% by end of this year.

In response, China imposed taxes on over 5000 U.S. products valued at $60 billion.

While there were rumors about the U.S. and China holding trade talks it was called off after the tariffs went into effect.

ECB President speech

The ECB President Mario Draghi gave a speech last week.

He acknowledged that inflation had picked up strongly.

Latest flash inflation estimates for the Eurozone show that headline consumer prices were back to 2.1% while core inflation rate was seen at 1.1%.

The bond markets reacted strongly with yields on the German bunds rising to the highest level.

The reaction came as the ECB is expected to wind down its QE program by end of this year.

FOMC Meeting

The FOMC hiked interest rates by 25bps at its meeting.

The monetary policy meeting was held on Wednesday.

The rate hikes were widely expected. The central bank said that it would follow through with one more rate hike by the end of this year.

The U.S. fed funds rate stands at 2.0% – 2.25% currently and will end 2018 at 2.25% – 2.50%.

The central bank also removed its forward guidance from its monetary policy statement.

GDP growth outlook was revised higher for 2018 and 2019.

However, the central bank expects unemployment to rise by one percentage point by next year.

The fed also signaled three rate hikes for 2019.

New Zealand Interest Rate

The Reserve Bank of New Zealand keeps OCR unchanged. The central bank meeting came on the back of the FOMC meeting.

As widely expected, the RBNZ left the official cash rate unchanged at 1.75%.

It signaled that interest rates would remain steady until 2020 and also said that the bias could shift if the economy deteriorated.

The RBNZ had basically pushed back interest rate expectations.

The Kiwi dollar was muted to the monetary policy decision. The central bank also expressed surprise at the recent 1.0% quarterly GDP growth.

The data beat the RBNZ’s forecast of a 0.5% quarterly growth rate.

US GDP

The U.S. second quarter GDP data was released on Thursday.

This was the final revised GDP for the period. As widely expected was unchanged.

The data showed a 4.2% increase as per the second revised estimates.

Economic data showed that durable goods orders increased sharply on the month, reversing the declines from the month before.

The U.S. dollar was seen settling the week on a strong footing.

Original Source: Orbex Market Analysis

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