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FX

Currency Markets Focus on Jackson Hole

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All eyes are likely to be on the annual gathering of central bankers at the Jackson Hole this week where ECB President Mario Draghi may offer clues on how he plans to trim the bank’s asset purchase program.

 

USD: Jackson Hole and return of US Congress key to the dollar’s near term outlook

  • The USD pared some of its losses against the JPY last Friday on news that Steve Bannon, the controversial advisor to President Trump was exiting the White House. The move is expected to help remove a layer of populism and protectionism from the Trump Administration, potentially creating a more positive environment for Republicans to focus on economic policy.

 

  • However, the lift in the dollar was short lived as investors await the Jackson Hole meeting of central bankers from August 24-26 to guide currency markets. The return of the US Congress on September 5 to discuss issues surrounding tax reform, healthcare, the debt ceiling and possibly infrastructure will also be important for the direction of the US dollar.

 

 

EUR & GBP: Further upside for EURGBP over the medium term

  • The relative performance of economic activity data between the UK, euro area and the US has historically proven to be a reliable signal for EURGBP spot movements. In recent months, the activity data from the euro area and the US has significantly outperformed the UK, which in turn coincided with GBP weakness versus the EUR and USD since April. As such, Citi analysts believe that there is further upside for the EURGBP in the medium term.

 

 

CAD: Canadian inflation likely to rise in coming months

  • While Canada’s headline inflation for July was in line with consensus at 1.2%, the reading was higher than the previous month. Citi analysts believe that Canada’s inflation has bottomed. Citi expects the Bank of Canada to hike interest rates in October, which will be supportive of the CAD.

 

 

CNY: China introduces curbs on FDI flows

  • China announced curbs on Foreign Direct Investment outflows by introducing a ‘banned, restricted or encouraged’ list for purchases of foreign assets. The government clamped down on areas seen as inappropriate or backdoor channels for offshoring money. Citi analysts believe that this strengthens the CNY and CNH in the near term as demand for the USD falls.

 

This is an extract from the Daily Currency Updated, dated 21st August. Please approach a Citigold Relationship Manager if you would like more information.

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Market Specific Disclosures

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This communication is for general information only, is not intended as a recommendation or an offer or solicitation for the purchase or sale of any products or services and should not be relied upon as financial advice. The information herein
has not taken account of the objectives, financial situation or needs of any particular investor. Any person considering an investment should consider the suitability of the investment having regard to their objectives, financial situation and needs,
and should seek independent advice before making an investment decision. You should obtain and consider the relevant product terms and conditions and risk disclosure statement, and consider if it’s suitable for your objectives, financial situation or needs before making any investment decision. Investors are advised to obtain independent legal, financial and taxation advice prior to investing. Investments are not deposits, are not protected by the Deposit Protection Scheme in Hong Kong
and are subject to investment risk including the possible loss of the principal amount invested.

This communication does not constitute the distribution of any information in any jurisdiction in which it is unlawful to distribute such information to any person in such jurisdiction.

CHKL does not provide discretionary portfolio management services.

Singapore: This communication is distributed in Singapore by Citibank Singapore Limited (“CSL”) to selected Citigold/Citigold Private Clients. CSL provides no independent research or analysis of the substance or in preparation of this communication. Please contact your Citigold/Citigold Private Client Relationship Manager in CSL if you have any queries on or any matters arising from or in connection with this communication. Investment products are not insured under
the provisions of the Deposit Insurance and Policy Owners’ Protection Schemes Act of Singapore and are not eligible for deposit insurance coverage under the Deposit Insurance Scheme.

This communication is for general information only and should not be relied upon as financial advice. The information herein has no regard to the specific objectives, financial situation and particular needs of any specific person and is not intended to be an exhaustive discussion of the strategies or concepts mentioned herein or tax or legal advice. Any person interested in the strategies or concepts mentioned herein should consult their independent tax, legal, financial or other advisors,
as appropriate. This communication does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer is not authorized or to any person to whom
it is unlawful to distribute such information or make any offer or solicitation.

Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making
an investment decision. Interested investors should seek the advice of their financial adviser about the issues discussed herein as appropriate. Should investors choose not to seek such advice, they should carefully consider the risks associated
with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives and assess whether the investment product is suitable for
themselves. Although information in this document has been obtained from sources believed to be reliable, CSL does not guarantee its accuracy or completeness and accept no liability for any direct or consequential losses arising from Its use.

CSL does not provide discretionary portfolio management services.

UAE: This document is distributed in UAE by Citibank, N.A. UAE. Citibank N.A. UAE is licensed by UAE Securities and Commodities Authority (“SCA”) to undertake the financial activity as Promoter under license number 602003.

Citibank N.A. UAE is registered with Central Bank of UAE under license numbers BSD/504/83 for Al Wasl Branch Dubai, 13/184/2019 for Mall of the Emirates Branch Dubai, BSD/2819/9 for Sharjah Branch, and BSD/692/83 for Abu Dhabi Branch.

This is not an official statement of Citigroup Inc. and may not reflect all of your investments with or made through Citibank. For an accurate record of your accounts and transactions, please consult your official statement. Before making any investment, each investor must obtain the investment offering materials, which include a description of the risks, fees and expenses and the performance history, if any, which may be considered in connection with making an investment decision. Each investor should carefully consider the risks associated with the investment and make a determination based upon the investor’s own particular circumstances, that the investment is consistent with the investor’s investment objectives.
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United Kingdom: This document is distributed in the U.K. by Citibank UK Limited and in Jersey by Citibank N.A., Jersey Branch.

Citibank UK Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our firm’s Financial Services Register number is 805574. Citibank UK Limited
is a company limited by shares registered in England and Wales with registered address at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB, Companies House Registration No. 11283101.

Citibank N.A., Jersey Branch is regulated by the Jersey Financial Services Commission. Citi International Personal Bank is registered in Jersey as a business name of Citibank N.A. The address of Citibank N.A., Jersey Branch is P.O. Box 104, 38 Esplanade, St Helier, Jersey JE4 8QB. Citibank N.A. is incorporated with limited liability in the USA. Head office: 399 Park Avenue, New York, NY 10043, USA.

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