Home > XE Currency Blog > XE Market Analysis: Global Trade Concerns Shake Currency Markets


XE Currency Blog

Topics6118 Posts6163
By xemarketanalysis July 11, 2018 12:11 pm
    xemarketanalysis's picture
    xemarketanalysis Posts: 623
    XE Market Analysis: Global Trade Concerns Shake Currency Markets


    • The Euro is stronger as reports suggest ECB is looking at a rate hike.
    • Bank of Canada raises interest rates as expected.
    • Global trade concerns fuel risk aversion across currency markets.


    The traditional higher yielding or risk currencies have been hard hit today as the US threaten large tariffs on China. In this environment the "carry trade" of borrowing in cheaper currencies and investing in higher-yielding currencies is unwound and so the likes of the Aussie Dollar and South African Rand get sold off aggressively - therefore weakening the currency. See attached Sterling/Rand chart. 


    The US Dollar is marginally lower today as investors steer clear of the Greenback after the trade tariff comments overnight. The focus from here will be the inflation data due out tomorrow, where annual CPI is expected to be slightly higher at 2.9%. 


    The Pound continues to struggle after the political uncertainty earlier in the week. The focus now is the tone of BoE Governor Mark Carney uses to describe the potential impact of Brexit on the UK economy in his speech this evening. Any mention of changes in interest rates will see an immediate impact on the Pound. 


    The Euro shot up against other major currencies after a shaky start to the day after a report that some ECB policy makers were considering a rate hike as soon as July 2019.  German Inflation numbers tomorrow will be watched closely for any change in trend.


    The Loonie is stronger this afternoon as is to be expected after the Bank of Canada raised interest rates. The Bank was concerned about the tariff conversations going on but was thinking further gradual rate increases are possible. 


    The Aussie Dollar is again feeling the effects of the tariff discussions taking place between the USA and China. The Australian economy is heavily reliant on exporting raw materials and goods to China.


    Paste link in email or IM