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US Dollar Comes Under Renewed Pressure

Daily Analysis - 27/07/2017

Dovish Tone From Federal Reserve Sends the Greenback Reeling

dollar


The US Dollar slumped on Wednesday and is extending losses in early Thursday trade. The US Federal Reserve's more cautionary inflation outlook reinforced the view that it might opt to not raise interest rates again this year even though additional monetary tightening may occur vis-à-vis balance sheet reduction.

Dollar Bulls Retreat


During its latest Open Market Committee decision, the US Federal Reserve noted the pervasive weakness in US inflation more explicitly than its previous statement.  The Central Bank indicated that inflation was “running below 2.00%,” compared to the June statement, where it said inflation was “running somewhat below 2.00%.” The Central Bank’s recognition of softer inflation, which it had previously judged as transitory, added to investor expectations that any plan to hike rates a third time this year might be delayed.

As was widely expected, the Fed kept interest rates unchanged while also hinting that it would start winding down its bond holdings “relatively soon.” USDCHF was last seen around the 0.9510-mark, with the pair in a strong intermediate-term downtrend.  Any dip below support at 0.9490 could unlock a fresh downturn in the pair.

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usdchfdaily07272017

UK Reports Sluggish Economic Growth


The British economy failed to generate significant momentum over the past three months, dashing any hopes of the Bank of England reversing last year's emergency rate cut. Figures from the Office for National Statistics estimate that economic output grew by 0.30% in the three months through the end of June, up from 0.20% during the first quarter. The data was in-line with the median forecast of economists taken from a Reuters survey.

Furthermore, the year-over-year growth rate slowed to 1.70% from 2.00%. The UK economy has been lacked in an unending battle to thwart an economic slowdown since the start of the year after inflation climbed to a four-year high, hurting consumer spending and lifting import prices. EURGBP is stuck within a narrow range early Thursday to last trade around the 0.8935.

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eurgbpdaily07272017

Income For Chinese Industrials Rises


Profits at Chinese industrial firms soared 19.10% in June from a year earlier, suggesting economic momentum remains solid despite rising borrowing costs. Profits in June grew to CNY 727.78 billion ($107.83 billion) according to a report issued by the National Bureau of Statistics early on Thursday. During the first half of the year, firms recorded profits of CNY 3.63 trillion, a 22.00% surge from the year ago period.

Chinese policymakers unveiled a string of regulatory measures earlier this year to curb a rapid build-up of debt. That saw a spike in borrowing rates, which investors worried would put pressure on corporate margins. With recent data indicating the economy is holding up better than anticipated, most analysts now expect the regulatory restrictions to continue through the remainder of the year. USDCNH is tumbling in Thursday morning trade to currently hover around 6.7280.

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usdcnhdaily07272017

Facebook Earnings Top Forecast


Facebook reported better than expected quarterly profits, buoyed by strong sales of mobile video advertisements, helping advertising revenue grow at more than twice the pace of bigger rival Google. Net income came in at $3.89 billion for the period or $1.32 a share compared to $2.28 billion and $0.78 a share reported one year earlier. The FactSet analysts’ consensus was for earnings of $1.12 a share.

Total revenue stood at $9.30 billion, compared to $6.40 billion a year earlier, also topping the FactSet consensus of $9.20 billion. The social networking giant reported 1.32 billion active daily users, a 17.00% year-on-year jump that managed to meet analyst estimates.  Shares of Facebook, which have appreciated 13.00% in the past three months, were last trading around $165.60 per share.

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facebookdaily07272017

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