Foreign exchange weekly update
13 June 2017
Please Note: The views expressed do not constitute investment advice and no liability is accepted to
recipients acting independently on its contents.
Economic news round-up
Britain: The results are in
One possible result of the hung parliament is that the Government may be more inclined to seek a degree of cross-party
support for a Brexit deal, opening the door to a ‘softer’ Brexit. It is this prospect that resulted in the resilience of the
FTSE100 index in the immediate aftermath of the general election result but it saw GBP lose some ground on Friday’s
trading. Given the ever-present risk of a rebellion by the Government’s own ‘Eurosceptic’ backbenchers, there is a risk that
the Government produces a Brexit deal that is too ‘hard’ for the opposition parties, but too ‘soft’ for the backbencher
Eurosceptics. In which case, the negotiations could potentially break up with no deal at all being reached before the UK
leaves the EU in March 2019. However the constantly changing political dynamic could present different options and it is
likely that markets will react to these political factors in near future.
The latest PMI (purchasing managers index) reports for the UK suggest a somewhat mixed performance last month. The
UK manufacturing PMI edged slightly lower in May 2017, but coming on the back of a rise in April 2017, the latest reading
of 56.7 is still higher than the 54.9 for the first quarter of 2017. The UK service sector report was weaker than expected, the
headline PMI falling by 2 points to 53.8 in May 2017. The general election, the start of serious Brexit negotiations later this
month, and the prospect of weaker consumer demand as inflation starts to bite were all cited by respondents as reasons
for a more cautious stance last month.
Eurozone: No change here
Last week’s ECB policy meeting passed with no change to interest rates or to the Quantitative Easing programme. Real
interest was toward a downward revision to the ECB’s inflation forecast, indicating that the ECB does not yet feel that
growth has picked up sufficiently to bring inflation back towards the 2% target. This reduces the risk of an early winding
down of the QE programme and means that the ECB maintains its guidance that the current level of interest rates should
be maintained for an extended period.
Japan making comeback
USD/JPY is creeping back below 110 on a weaker equity market in both Asia and Europe. The data on Japanese machine
orders for April 2017 were softer than expected, reducing 3.1% MoM against a consensus looking for a 0.5% rise. The
miss in April 2017 could suggest some caution still persists among corporate Japan. More widely, it raises further
questions over whether the economy has enough traction to get inflation back to target. If Abenomics* is failing, the market
will increasingly question whether the move in USD/JPY from 80 at the start of Abenomics to 110 currently was warranted.
*Abenomics refers to the economic policies advocated by Shinzō Abe since the December 2012 general election, which
saw Abe to his second term as Prime Minister of Japan.
Last week:
GBP/USD started the week at 1.2869, reaching the high point of 1.2978 on Thursday. After this GBP lost ground following
the electoral news down to the low of 1.2636 on Friday, closing the week off at 1.2727. Meaning the currency traded within
a 2.64% range.
EUR/GBP started the week at 0.8765 reaching the low point of 0.8652 on Thursday. After this EUR strengthened up to the
high of 0.8860 on Friday, closing the week off at 0.8805. Meaning the currency traded within a 2.40% range.
EUR/USD started the week at 1.1281, reaching the high point of 1.1284 on Tuesday. After this USD strengthened to show
a EUR low of 1.1283 on Friday, closing the week off at 1.1209. Meaning the currency traded within a 1.04% range.
Source: All data sourced from various HSBC publications / HSBC research materials for the relevant week. To be read in conjunction
with Important Information on last page.
1
Foreign exchange weekly update
13 June 2017
Please Note: The views expressed do not constitute investment advice and no liability is accepted to
recipients acting independently on its contents.
Economic data due for release this week
Any forecast, projection or target provided is indicative only and is not guaranteed in any way.
Day
Date
Time
Region
Tuesday
Tuesday
Tuesday
Wednesday
Wednesday
Wednesday
Thursday
Thursday
Friday
13/06/17
13/06/17
13/06/17
14/06/17
14/06/17
14/06/17
15/06/17
15/06/17
16/06/17
09.30
10.00
13.30
09.30
12.00
19.00
12.00
13.30
10.00
UK
EC
USA
UK
USA
USA
UK
USA
EC
Data
CPI (Consumer price index) MoM
ZEW Survey Expectations
PPI (Producer Price Index) Final Demand MoM
ILO Unemployment rate 3months
MBA Mortgage Applications
FOMC Rate Decision
Bank of England Bank Rate
Initial Jobless Claims
CPI (Consumer price index) MoM
*Previous
Forecast
0.5%
35.1
0.5%
4.6%
7.1%
1.00%
0.25%
245K
0.4%
0.2%
0.0%
4.6%
1.25%
0.25%
241K
-0.1%
*Previous is the last data released by the relevant organizations or reporting agencies.
Source: Economic data releases sourced from Bloomberg for the relevant week. Data or information releases available outside HSBC
may vary depending on the source and time of release. To be read in conjunction with Important Information on last page.
HSBC rate forecasts - LAST UPDATED 17 May 2017
Any forecast, projection or target provided is indicative only and is not guaranteed in any way. Market
volatility can be expected with political events.
End quarter
Q2 17
Q3 17
Q4 17
USD
1.25
1.22
1.20
JPY
133
126
120
JPY
106
103
100
CAD
1.37
1.35
1.35
CHF
0.98
0.94
0.90
AUD
0.72
0.75
0.75
NZD
0.67
0.70
0.70
ZAR
13.50
14.00
14.00
SGD
1.42
1.43
1.43
USD
1.10
1.15
1.20
GBP
0.88
0.94
1.00
SEK
9.80
9.80
9.80
NOK
9.30
9.00
8.70
CHF
1.08
1.08
1.08
GBP
USD
EUR
LAST UPDATED 17 May 2017
Source: Unless otherwise specified, all data sourced from various HSBC publications / HSBC research
materials for the relevant week. To be read in conjunction with Important Information on last page.
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Foreign exchange weekly update
13 June 2017
Historic exchange rates
Please remember, past performance cannot be taken as an indication of future performance.
Source: Data tables sourced from Bloomberg. To be read in conjunction with Important Information on
last page.
1 Week Chart
GBP/USD
Low
High
52 Week Range
1.2047
1.4877
Previous Week
1.2665
1.2974
1 Year Chart
Currency pair value
Currency pair average value
1 Week Chart
EUR/GBP
Low
High
52 Week Range
0.7653
0.9118
Previous Week
0.8657
0.8835
1 Year Chart
Currency pair value
Currency pair average value
EUR/USD
Low
High
52 Week Range
1.0388
1.1385
Previous Week
1.1169
1.1282
1 Week Chart
1 Year Chart
1 Week Chart
1 Year Chart
Currency pair value
Currency pair average value
USD/CAD
Low
High
52 Week Range
1.2753
1.3749
Previous Week
1.3426
1.3523
Currency pair value
Currency pair average value
3
Foreign exchange weekly update
13 June 2017
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