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Positive US Data Fails to Lift the Dollar

The US dollar failed to stage a meaningful rebound yesterday despite gains in US industrial production and the Philly Fed manufacturing gauge.

 

USD & JPY: Emerging concerns stifle a USD rebound

  • Citi analysts see the USD being weighed down by subdued inflation and deepening concerns over the Trump administration’s ability to make progress on reforms following the disbandment of his Strategic and Policy Forum and Manufacturing Council of CEOs. With Janet Yellen’s term ending in January 2018, market attention is also turning to who the next Fed Chairperson would be.

 

 

EUR, GBP & CHF: Better than expected UK retail sales fails to lift the GBP

  • The EURUSD fell last night as the minutes from the European Central Bank’s latest meeting revealed concerns over the strength of the euro.

 

  • UK headline retail sales in July beat expectations but failed to lift the GBP as the gains were mostly driven by food. Instead, investors focused on the significant downward revisions to the June retail sales figures.

 

 

AUD: Strong jobs data but wage growth likely to remain subdued

  • The Australian economy created 27.9k jobs in July, beating expectations. The unemployment rate fell to 5.6%. Despite the positive jobs data, Citi analysts believe that ample slack in the labour market should keep wages subdued. Given the Reserve Bank of Australia’s concerns over Australia’s high household debt levels and the stronger currency, Citi analysts believe that it would be challenging for the AUD to strengthen further.

 

 

Asia EM: Monetary Authority of Singapore likely to keep policy unchanged in October

  • Singapore’s non-oil domestic exports moderated in July, growing slightly below expectations at 8.5%. Nevertheless, Citi analysts still expect external demand to be supportive of growth. With both growth and inflation in line with the central bank’s assumptions, Citi analysts expect the Monetary Authority of Singapore to keep monetary policy unchanged in 2017.

 

This is an extract from the Daily Currency Update, dated 18th August. Please approach a Citigold Relationship Manager if you would like more information.

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