Fundamental Analysis - 2017.07.17

Market Overview
USD experienced an observable drop on Friday after the announcement of CPI inflation, that was expected to be lower. Compounding the effect was a slip in retail sales fell continuing last month’s trend. Estimates gauge the possibility of another rate hike at under 50%., of course this is a disparate position from FOMC’s plan to commit 4 increases by 2018. There is a reason for this distance between investors and the Federal Reserve’s stance on hikes, the Fed have proven unrealistic in the past, overshooting what they actually commited. This distance between the two forecasts are so stark that some analysts at this point are assuming a December hike will be the last one for a significant amount time.



The USD has also been feeling the ripples of this sentiment dollar as it lagged significantly behind other of its major world currencies, including EUR and even the “safe-haven” AUD. JPY contradicts this to a certain extent .


Today’s Overlook
the only major indicator out today for both the US and European trading days is the Empire State manufacturing survey. As estimations go, the data might be slightly underwhelming for investors though as the Philadelphia Fed survey was on Thursday. I

New Zealand’s CPI is estimated to slight bump up in the region of 0.2% qoq. This slight shift would cause the yoy rate of change down from 2.2% to 1.9%. This is still within the target set at 2% for the Reserve Bank of New Zealand’s 2% which should be raising some red flags. NZ is yet another country with dovish stance regarding interest rates a recent global trend. This might even have an effect on other currencies including EUR and GBP.
The GBP experienced a dip in its price, lowest in fact of the last 10 mo., this is largely (if not exclusively) due to the political instability experienced by the second round of Brexit talks between the EU and British Administration.

The Reserve Bank of Australia’s meeting on July 4th perplexed some that were expecting the Central Bank to have a more hawkish stance regarding interest rates. This has the potential to put AUD at a disadvantage to other primary currencies as their countries have already started the process of normalization.


This article comprises the personal view and opinion of the STO Investment Research Desk and at no time should be construed as Investment Advice.

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