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Monthly FX Report January
Monthly FX Report January
January 2017
EUR/USD 1M EUR/USD 1Y
1.0900 1.1800
1.0800 1.1600
1.0700 1.1400
1.0600 1.1200
1.0500 1.1000
1.0400 1.0800
1.0300 1.0600
1.0200 1.0400
1.0100 1.0200
1.0000 1.0000
2 - Jan 9 - Jan 16 - Jan 23 - Jan 30- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
MARKET ANALYSIS
The world is absorbed by a number of pressing issues, a stagnant global economy, a humanitarian crisis and the skulking impact of global warming. The
combination of rising inequality, growing polarization, the proliferation of "fake news" and populist candidates will pose a severe challenge to democracies
around the world, particularly those in North America and Europe that have a political calendar in 2017 quite full.
Starting in the USA, Donald Trump has been the main name in the political panorama these latest months. He has shown intentions of undoing several
political decisions made by its previous administration and reforming some economic and social assumptions that the world and USA itself have shaped
during the latest decades. Trumps Presidency was initiated on 20 th January and since then he has been bringing instability to politics and therefore to the
markets. Along with other examples, he has decided to reject Syrian refugees from crossing US borders, interrupt the US Refugee Admissions Program,
ban people from seven Muslim nations (Syria, Iran, Libya, Sudan, Iraq, Yemen and Somalia) from entering in the US, support change of US Embassy in Israe l
from Tel Aviv to Jerusalem and triple "enforcement and removal operations/agents" to ban from the US 2-3 million people with criminal sentences without
valid immigration state, as a sign of his potential unorthodox conduct on foreign policy. Trumps Administration has also decided to appease relations with
Russian President, specifically in order to collaborate in ISIS destruction. Another controversial measure is the intention to build a wall between Mexico and
the US, making Mexico pay for it (in an undetermined way yet, but at least with protectionist tariffs). It was also shown the intent of recover Keystone XL
Project (its a proposed crude oil pipeline, beginning in Alberta extending to Nebraska; this pipeline is a critical infrastructure project for the economic
strength and energy security of the United States) and Dakota Access Pipelines (it begins in the North Dakota and travels to Illinois) which were blocked
by Obama due to potential damages on environmental and cultural/historical assets. In Economic Policy, it was decided to step back the US from Trans-
Pacific Partnership and started a renegotiation of the trade agreement with Mexico and Canada. (Source: CNN)
In Europe, as well, political instability within European countries appears to be on the rise. Beginning with the Brexit cas e, since June 2016 when the EU
referendum took place and the "Leave" won, the United Kingdom is preparing to activate the 50 th article of the Treaty of Lisbon. On 13 th July, the Prime
Minister of UK has changed to Theresa May with the resign of David Cameron (both from Conservative Party). The Supreme Court was asked to judge on
the legitimacy of the government to trigger the 50th Article by itself, restraining May actions. The response was that the decision needed to go to the
Parliament of England but not of Scottish, Welsh, and Northern Ireland ones. Even so, the Parliament voted in favor of the EU-leave in respect with the
referendum result. (Source: BBC)
Netherlands goes to the polls on 15 th March, to elect all 150 members of the House of Representatives. At the moment, polls are projecting the anti-
European Party for Freedom (PVV) will win the elections (is set to win 35 of the 76 seats needed to form a coalition governme nt). However, given the
fragmentation of the Dutch political scene, the far-right party's leader, Geert Wilders, is unlikely to get a majority. Dutch Prime Minister Mark Rutte, center-
right Liberals (VVD), follows second in polls, (with just 23 seats), and he has already ruled out a coalition between VVD and the PVV. Wilders has pledged
to close the Netherlands borders, shut down mosques and leave the euro and EU if he gets into power. (Source: The Economist)
In Europe, there will be even more important elections soon, particularly Norway, Slovenia and Hungary. It should be noted that Italy and Greece are
experiencing difficult times at the political level whose future is still very uncertain. More European countries will go to the polls in 2017, anticipating political
movements of great importance.
2016 was the year where one political controversy or another was always around the corner. But 2017 promises to be just as unpredictable with international
politics been even more volatile because of an "unusually wide constellation of leaders known for their erratic behavior", as said for Ian Bremmer (political
risk researcher).
Exotic currency is the term given to traded currencies which are illiquid. They arent common, with lack of popularity in terms of consistent market
activity, and trade with high bid-ask spreads. It is not as easy to trade exotic currency because the market does not have the same amount of activity
for exotic currency as it does for main currencies. Exotic currency is usually from developing countries such as parts of Asi a, the Pacific, the Middle
East and Africa.
A few examples are: ARS - Argentinean Peso, BRL - Brazilian Real, CLP - Chilean Peso, CNY - Chinese Yuan Renminbi, EGP - Egyptian Pound, HKD -
Hong Kong Dollar, HUF - Hungarian Forint, INR - Indian Rupee, ISK - Icelandic Krona, KRW - South Korean Won, MXN - Mexican Peso, PLN - Polish
Zloty, RUB - Russian Ruble, SGD - Singaporean Dollar, TRY - New Turkish Lira, ZAR - South African Rand and ZWD - Zimbabwe Dollar.
Analyst & Trader Analyst & Trader Analyst & Trader Analyst & Trader
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MARKETANALYSIS
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