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By xemarketanalysis August 11, 2017 3:00 pm
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    XE Market Analysis: Risk Off Sentiment Dominates World Markets

    OVERVIEW

    • US Dollar slides as CPI disappoints.
    • Sterling ends the week down across the board on a poor economic outlook.
    • Euro remains strong on positive sentiment for the single currency.
    • Korean Won continues its slide on the growing tensions between the US and North Korea.

    HIGHLIGHT

    The current risk off sentiment in world markets has driven the currency markets for the last few weeks. The growing tensions between the U.S. and North Korea have witnessed a significant shift out of riskier assets and currencies into the traditional safe havens. For example, the Swiss Franc and Japanese Yen on the currency front and gold/precious metals in general.

    US DOLLAR

    The US Dollar is weaker today as inflation numbers were disappointing. Inflation for July was a paltry 0.1% making the annual increase in prices just 1.7%. Weekly and hourly average earnings were disappointing on top of the inflation numbers. 

    BRITISH POUND

    The Pound ends the week lower across the board as the economic outlook for the next couple of years looks grim. After the Bank of England downgraded their growth forecasts in their quarterly inflation report, and the chances of a rate hike this year subside, the Pound is simply unattractive to investors. The major focus in the weeks/months ahead will continue to be the progress made in Brexit negotiations. 

    EURO

    The Euro is trading sideways today on a quiet end of the week on the economic data front. German inflation came out in line with expectations for July at 0.4% which leaves the annual number unchanged from the previous reading at 1.7%. The Euro continues to attract good buyer demand on the positive sentiment over Europe since the beginning of 2017. 

    CANADIAN DOLLAR

    The Loonie is stronger today after the weaker U.S. inflation number sent the US Dollar weaker. On the other side, crude oil prices continued their decline and should weigh on the Canadian currency in the weeks ahead. 

    AUSTRALIAN DOLLAR

    The Aussie is weaker again today as risk off sentiment grips world markets. Comments from the Australian Prime Minister over invoking the military alliance with America should North Korea attack.  

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