August 6 2017

Aug. 6, 2017 (Commerzbank AG) -

In the short term, the euro should continue to
trend stronger, due to the political chaos in
the US and the ECB passing off a reduction
of bond purchases as a success in
September. EUR/USD will not probably be
able to decrease before the market prices in
more aggressive Fed rate hikes towards the
beginning of 2018.

• Regarding Brexit negotiations, our working
assumption is that ultimately there will be an
amicable agreement. However, uncertainty
will remain high for a long period so that
sterling will not recover for the time being.

• CNY seems set to further depreciate against
the dollar over the coming quarters.

                  3.8.2017     Q3 17   Q4 17   Q1 18   Q2 18   Q3 18

EUR/USD     1.18            1.22       1.19       1.16        1.14        1.15
USD/JPY       110             110         112        115         110        108
EUR/CHF     1.15            1.17        1.16       1.14        1.12       1.13
EUR/GBP     0.90          0.90      0.91       0.90      0.89      0.91
AUD/USD     0.79          0.80      0.80      0.81       0.82      0.83
USD/CAD      1.26          1.27        1.27       1.26       1.25       1.24
USD/CNY      6.72         6.68       6.76       6.83       6.84      6.83


USA 

Aug. 4, 2017 (Tempus, Inc.) – The U.S. looked to today’s economic docket to help stop its recent bleeding.  The Bloomberg Dollar Index fell for its fifth conservative month in July, its longest losing streak since 2011.  The same index is set for its 4th straight weekly decline as political risks have weighed on the greenback.  Yesterday, the news broke that Special Counsel Robert Mueller has convened a grand jury in Washington DC as the Russian tampering investigation continues to ramp up.  The dollar fell sharply as the headline hit the wire but quickly regained most of those losses.

The dollar is indeed rallying in early trading after jobs data impressed. Employers added 209K workers in the month of July, beating expectations of a 180K.  Last month’s print was also upwardly revised by 9K. The unemployment rate held at 4.3%.  A further breakdown of the data showed that average hourly earnings rose 0.3% month over month, after a 0.2% gain in June.  The uptick in earnings could help spur consumption, which is 70% of the American economy, and sustain growth.

The average jobs pace since January this year is 179K a month, still under that average of 187K a month last year.

EUR

The Euro remains elevated and within striking distance of it 20-month high against the U.S. dollar.  A day after German PMI gave traders cause for concern over the health of Europe’s largest economy, today’s data shows the PMI scare may be a one-off.  German factory orders for June rose 1.0% month over month, doubling expectations.

GBP

The British pound floated in no-man’s land overnight as traders continue to digest yesterday’s Bank of England meeting.  The central bank held its benchmark interest rate unchanged, which was widely expected.  However, they did downgrade their economic outlook for the remainder of the year and next in the face of Brexit challenges.  The sterling sold-off during yesterday’s session and looks to do the same today following better-than-expected U.S. jobs data.