Aussie opens at two-week highs

OFX Daily Market News

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  Australian Dollar

The Australian Dollar has found some upside when valued against its US counterpart over the past 24 hours, trading as high as 0.7464 just at the end of the New York session. However, it wasn’t all good news intraday with the release of Australian CPI figures, headline inflation remained flat at 0.4% q/q which was below expectations and headline inflation moved just into the RBA’s target range of 2-3% at 2.1% y/y. The trimmed mean which is the RBA’s preferred measure edged down 0.5% q/q while was on a y/y basis at 1.9% y/y – still just under the target band hence why we initially saw a high of 0.7448 just after 11.30 AEST and then a quick pull back thereafter. Traders continued to sell the Aussie and as we closed the Asian session and we were back under 74c again. Market pricing is implying that the cash rate will remain unchanged for a considerable period of time, with a less than 50% chance of a hike in the next 12 months.

The local unit buoyed by risk appetite in the markets after Trump and EU Junker struck a deal to increase trade, reduce tariffs and costs, and increase U.S. farm and natural gas exports to Europe in order to avert an all-out trade war between the two.

Looking ahead, we have the release of Import Prices by the Australian Bureau of Statistics which measures the change in the price of goods purchased by importers. The data contributes to inflation for both businesses and consumers. We are expecting to see an increase on 1.9% on the previous 2.1% while the Export Price Index is expected at 3.9% (previous 4.9%). The data is unlikely to drive much action, upport sitting at 0.7400 and resistance up at 0.7490.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0830 – 1.0970

The New Zealand dollar rallied overnight jumping back through 0.68 to touch highs at 0.6842 as the US dollar fell against G-10 counterparts. The Kiwi shook off a softer than anticipated trade balance print and found support through Wednesday as the embattle Chinese Yuan edged marginally higher while trade talks between the US and Europe appear to have eased tensions and fears for an all-out trade war. President Trump and EU President Juncker met in Washington with both sides allowing concessions in an agreement that is hoped will ease trade barriers.

With risk appetite bolstered the Kiwi drove toward three-week highs punching through resistance at 0.6820 and testing firmer technical opposition at 0.6850. Attentions now turn to US GDP data Friday for broader macroeconomic direction while ongoing currency and trade hostilities drive short term demand for risk. With the majority of investors posting net shorts against the NZD we expect upside gains will remain hard won with moves toward and above 0.6850 likely to meet profit taking, however a break above this handle opening the door for a run back toward 0.6950 and 0.70.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7620 – 1.7790

The Great British Pound is slightly stronger again this morning when valued against its US counterpart reaching a 24-hour high of 1.3200 on the back of strong local data and overall US dollar weakness.

On the data front yesterday the CBI (Confederation of British Industry) Realized Sales survey dropped 20 points, but still beat the estimate 16 points. Retail sales growth remained strong in July but well below the previous month 32 points. There are no macroeconomic releases scheduled on Thursday.

From a technical perspective, the GBP/USD pair is currently trading at 1.3190. We continue to expect support to hold on moves approaching 1.3040 while now any upward push will likely meet resistance around 1.3200.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7350 – 0.7480

The United States Dollar is weaker across the board over the past 24 hours with the US Dollar Index falling 0.4% against a basket of currencies. The big headline came out of Europe this time with conciliatory comments from President Trump after his press conference with EU President Juncker. In China, the media continues to report on further, targeted measures by the PBOC on capital requirements for banks. Ultimately, the improved global conditions saw capital return to risky assets and the Greenbacks counterparties marginally rise against the Dollar.

Ahead of their much-anticipated meeting on trade, President Trump held a joint press conference with President Juncker saying “we expect something very positive” to come of the meeting. Despite the lack of real information, the market reacted positively to the initial press conference on the hope of reconciliation. The Euro in-particular accelerated northward with the Great British Pound also finding its feet to near weekly highs. Nevertheless, auto tariffs remain a point of contention with reports of both sides considering tariff options. In Asia, the other target of US trade aggression China, looks to further ease policy measures to encourage growth with the latest announcement from the PBOC. The PBOC was reported to have eased counter-cyclical capital requirements for banks in an attempt to boost lending. The positive moves by China to encourage growth had a significant impact on commodity currencies with the Aussie in-particular pushing two-week highs.

In the day ahead, market focus will continue to likely be on the Trump-Juncker trade discussions.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6380

EURUSD spiked 0.40% to 1.1735 amid the recent agreement reached by the US and the European Union. Trump announced that the EU will be expanding lng (gas) and soybean imports from the US and both countries will be reducing industrial tariffs.

The EURUSD broke and stayed above the 1.1720 resistance level, a bullish short-term signal. Markets will be closely watching Tonight’s ECB rate decision and tomorrow’s US 2Q GDP release for further hints on where to go from here.

The Q&A session following the ECB decision is generally a volatile event so keep an eye on price action around 1.1680 and 1.1780.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9650 – 0.9780

The loonie had the best performance among other major currencies versus the dollar, strengthening 0.90% as USDCAD dropped to 1.3041.

Continued oil WTI strength and optimistic headlines around the NAFTA agreement brought further support for the CAD and spot was able to break through the 1.3110 support with ease.
It now seems like we have entered into a new range between 1.30 and 1.31 which will probably be tested as the ECB meeting resumes and the market gets a sneak peak of the US economy with 2Q GDP.

 

 

 

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Trump and Junker Meeting in Washington to Discuss Tariffs

OFX Daily Market News

Posted by OFX

  United States Dollar

Risk sentiment took another twist in overnight trading with the market responding actively to rebounds in commodity markets and equities in China. The risk-on environment led to a marginal softening of the Greenback with the US Dollar Index now treading water at 94.61, a measly 0.02% lower. Ultimately, however, commodity currencies are higher against the United States Dollar with most other majors remaining relatively flat.

President of the European Commission Jean-Claude Junker and EU Trade Commissioner Cecilia Malmstrom will meet with President Trump in Washington today. A bilateral agreement between the EU and the U.S. on trade is the agenda. Trump did tweet last night that both sides should eliminate all tariffs. Market participants see the tweet complicating the negotiations as neither side is at that point on resolving the fight over tariffs.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3071 – 1.3157

The USDCAD continued trading within the short-term range of the last sessions, but the CAD managed to close 0.12% stronger versus the USD at 1.3155.

The USD ended the day relatively unchanged versus a basket of major currencies, but commodities and resource-based currencies performed well against the USD amid China’s fiscal stimulus plan. The PBOC also mentioned measures to ease monetary policy and ramp up fiscal policy. China did fall short of announcing a big stimulus package, but nevertheless, the direction was clear, and the market responded accordingly. Chinese equities were boosted by approximately 5% since Friday with commodity prices also benefitin

With a very light week on the economic data front for Canada, market participants are paying close attention to resuming NAFTA negotiations. Foreign Affairs Minister Chrystina Freeland is in Mexico meeting with outgoing and incoming counterparts after talks were stalled for the July 1st Mexican Presidential elections. Trump has threatened to scrap NAFTA and put together singular deals for Canada and Mexico, also saying that he would prioritize a Mexican agreement first.

 

 

 

  Euro

EUR / USD Expected Range: 1.1676-1.1712

As mentioned earlier, tomorrow sees the latest ECB interest rate decision with no change all but guaranteed from the Governing Council. It’s unlikely there will be any hints with regards to the timing of future rate hikes other than they will occur mid-2019. As we approach August things will likely quieten down as they generally do over the holiday period however there is always Donald Trump to keep people on their toes!

This morning’s one print of note has been a slightly better than expected German IFO Business Climate survey which came in at 101.7 rather than 101.6 predicted. The survey has taken a big leg down of late printing 114.7 in March before dropping to 102.1 in April as Trump-fueled trade concerns weigh on German business sentiment. GBP/EUR is a little higher currently trading around 1.1245.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3138-1.3178

Sterling has continued to rally throughout the past 24 hours following last week’s drop below 1.30 against the dollar. With a lack of fundamental data, this week from the UK traders may be eyeing up next week’s interest rate decision from the Bank of England and starting to price in a hike. Another small crumb of comfort may report that UK PM, Theresa May is set to take charge of Brexit negotiations going forward. With former Brexit Secretary, David Davis resigning in the wake of the new plan for future trade/customs being revealed it appears the PM will be taking a more assertive role alongside new Brexit Secretary, Dominic Raab.

We could see a (very) limited recovery in sterling over the next six weeks as parliament has its summer break and Brexit news thins out a little however we are now only three months before a future trade/customs plan is meant to have been thrashed out by so it could just be a temporary reprieve. GBP/USD is back above 1.3150.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7392-0.7449

The Australian Dollar throughout Tuesday’s Asian session remained under pressure and stayed below 74c on the back of renewed US Dollar buying interest. However, an advance in both Copper and Zinc prices both up more than 2% pushed the AUD/USD pair through short-term resistance touching an eventual high of 0.7434 in the early hours of New York. The Aussie led the advance in the G10 currencies and performed the best moving from a low of 0.7360 to a high of 0.7434.

With no significant data releases yesterday, investors remained mindful of Trump’s displeasure over the Fed’s monetary tightening claiming that their plans to raise U.S. interest rates risked undermining his efforts at strengthening the economy.

All eyes will be focused today on Consumer Price Index (CPI) figures which should freshen the debate as to when the RBA is likely to raise rates again. The headline reading for inflation is expected to pick up in the second-quarter of 2018. Markets are waiting to see a small jump from 0.4% to 0.5% q/q and 2.3% y/y. This would put the inflation rate back within the confines of the RBA’s 2% to 3% target band.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6786-0.6821

The New Zealand dollar pushed back through 0.68 U. S. cents as risk appetite gained broader traction on news China will support easing monetary policy and increase fiscal stimulus into the end of the year. Equities have rebounded some 5% since Friday’s close, and the yuan stabilized above 13-month lows allowing the Kiwi to shrug off yesterday’s softening and push back toward resistance at 0.6820.

While one of the day’s top outperformers the Kiwi still struggled to push through key technical stops and faltered on approaches nearing 0.6820. Much like its antipodean counterpart the NZD appears largely range bound constrained by broader global trends and longer-term expectations of neutral monetary policy.

With support at 0.67-0.6720 attentions turn to Junes trade balance print today for short-term guidance. Anything short of a $200million surplus could put pressure on the Kiwi and prompt a shift back below 0.68.

 

 

 

Posted by OFX

Commodity-Based Currencies Gain on Chinese Central Bank Stimulus Plan.

OFX Daily Market News

Posted by OFX

  Canadian Dollar

The USDCAD continued trading within the short-term range of the last sessions, but the CAD managed to close 0.12% stronger versus the USD at 1.3155.

The USD ended the day relatively unchanged versus a basket of major currencies, but commodities and resource-based currencies performed well against the USD amid China’s fiscal stimulus plan. The PBOC also mentioned measures to ease monetary policy and ramp up fiscal policy. China did fall short of announcing a big stimulus package, but nevertheless, the direction was clear, and the market responded accordingly. Chinese equities were boosted by approximately 5% since Friday with commodity prices also benefiting.

With a very light week on the economic data front for Canada, market participants are paying close attention to resuming NAFTA negotiations. Foreign Affairs Minister Chrystina Freeland is in Mexico meeting with outgoing and incoming counterparts after talks were stalled for the July 1st Mexican Presidential elections. Trump has threatened to scrap NAFTA and put together singular deals for Canada and Mexico, also saying that he would prioritize a Mexican agreement first.

 

 

 

  United States Dollar

USD / CAD Expected Range: 1.3071 – 1.3157

Risk sentiment took another twist in overnight trading with the market responding actively to rebounds in commodity markets and equities in China. The risk-on environment led to a marginal softening of the Greenback with the US Dollar Index now treading water at 94.61, a measly 0.02% lower. Ultimately, however, commodity currencies are higher against the United States Dollar with most other majors remaining relatively flat.

President of the European Commission Jean-Claude Junker and EU Trade Commissioner Cecilia Malmstrom will meet with President Trump in Washington today. A bilateral agreement between the EU and the U.S. on trade is the agenda. Trump did tweet last night that both sides should eliminate all tariffs. Market participants see the tweet complicating the negotiations as neither side is at that point on resolving the fight over tariffs.

 

 

 

  Euro

CAD / EUR Expected Range: 0.6502-0.6528

As mentioned earlier, tomorrow sees the latest ECB interest rate decision with no change all but guaranteed from the Governing Council. It’s unlikely there will be any hints with regards to the timing of future rate hikes other than they will occur mid-2019. As we approach August things will likely quieten down as they generally do over the holiday period however there is always Donald Trump to keep people on their toes! This morning’s one print of note has been a slightly better than expected German IFO Business Climate survey which came in at 101.7 rather than 101.6 predicted. The survey has taken a big leg down of late printing 114.7 in March before dropping to 102.1 in April as Trump-fueled trade concerns weigh on German business sentiment. GBP/EUR is a little higher currently trading around 1.1245.

 

 

 

  British Pound

CAD / GBP Expected Range: 0.5775-0.5803

Sterling has continued to rally throughout the past 24 hours following last week’s drop below 1.30 against the dollar. With a lack of fundamental data this week from the UK, traders may be eyeing up next week’s interest rate decision from the Bank of England and starting to price in a hike. Another small crumb of comfort may report that UK PM, Theresa May is set to take charge of Brexit negotiations going forward. With former Brexit Secretary, David Davis resigning in the wake of the new plan for future trade/customs being revealed it appears the PM will be taking a more assertive role alongside new Brexit Secretary, Dominic Raab. We could see a (very) limited recovery in sterling over the next six weeks as parliament has its summer break and Brexit news thins out a little however we are now only three months before a future trade/customs plan is meant to have been thrashed out by so it could just be a temporary reprieve. GBP/USD is back above 1.3150.

 

 

 

  Australian Dollar

CAD / AUD Expected Range: 1.0219-1.0290

The Australian Dollar throughout Tuesday’s Asian session remained under pressure and stayed below 74c on the back of renewed US Dollar buying interest. However, an advance in both Copper and Zinc prices both up more than 2% pushed the AUD/USD pair through short-term resistance touching an eventual high of 0.7434 in the early hours of New York. The Aussie led the advance in the G10 currencies and performed the best moving from a low of 0.7360 to a high of 0.7434.

With no significant data releases yesterday, investors remained mindful of Trump’s displeasure over the Fed’s monetary tightening claiming that their plans to raise U.S. interest rates risked undermining his efforts at strengthening the economy.

All eyes will be focused today on Consumer Price Index (CPI) figures which should freshen the debate as to when the RBA is likely to raise rates again. The headline reading for inflation is expected to pick up in the second-quarter of 2018. Markets are waiting to see a small jump from 0.4% to 0.5% q/q and 2.3% y/y. This would put the inflation rate back within the confines of the RBA’s 2% to 3% target band.

 

 

 

  New Zealand Dollar

CAD / NZD Expected Range: 1.1165-1.1214

The New Zealand dollar pushed back through 0.68 U. S. cents as risk appetite gained broader traction on news China will support easing monetary policy and increase fiscal stimulus into the end of the year. Equities have rebounded some 5% since Friday’s close, and the yuan stabilized above 13-month lows allowing the Kiwi to shrug off yesterday’s softening and push back toward resistance at 0.6820.

While one of the day’s top outperformers the Kiwi still struggled to push through key technical stops and faltered on approaches nearing 0.6820. Much like its antipodean counterpart the NZD appears largely range bound constrained by broader global trends and longer-term expectations of neutral monetary policy.

With support at 0.67-0.6720 attentions turn to June’s trade balance print today for short-term guidance. Anything short of a $200million surplus could put pressure on the Kiwi and prompt a shift back below 0.68.

 

 

 

Posted by OFX

Sterling higher as Theresa May takes control of Brexit negotiations.

OFX Daily Market News

Posted by OFX

  British Pound

Sterling has continued to rally throughout the past 24 hours following last week’s drop below 1.30 against the dollar. With a lack of fundamental data this week from the UK traders may be eyeing up next week’s interest rate decision from the Bank of England and starting to price in a hike. Another small crumb of comfort may be reports that UK PM, Theresa May is set to take charge of Brexit negotiations going forward. With former Brexit Secretary, David Davis resigning in the wake of the new plan for future trade/customs being revealed it appears the PM will be taking a more assertive role alongside new Brexit Secretary, Dominic Raab. We could see a (very) limited recovery in sterling over the next six weeks as parliament has its summer break and Brexit news thins out a little however we are now only three months before a future trade/customs plan is meant to have been thrashed out by so it could only be a temporary reprieve. GBP/USD is back above 1.3150.

 

 

 

  United States Dollar

GBP / USD Expected Range: 1.3115 – 1.3200

The dollar has steadied after dropping last week on Trump’s twitter tirade and staging a recovery at the start of this week. It is trading in narrow bands against both its main trading peers with EUR/USD caught between 1.1660 and 1.1715 for the past 24 hours. USD/JPY is much the same moving between 111 and 111.45 as traders await the two key data-sets of the week. Tomorrow sees the ECB interest rate decision with no change of policy expected before Friday’s advance Q2 GDP print from the States. An annualised increase of 4.1% is expected as the US economy moves up a gear. Should the print beat forecast then expect a dollar rally as the likelihood of four interest rate hikes from the Fed rises. Ahead of this we have Durable Goods Orders m/m tomorrow with a 3% rise overall and a 0.5% increase for the core component expected.

 

 

 

  Euro

GBP / EUR Expected Range: 1.1225 – 1.1310

As mentioned earlier, tomorrow sees the latest ECB interest rate decision with no change all but guaranteed from the Governing Council. It’s unlikely there will be any hints with regards to the timing of future rate hikes other than they will occur mid-2019. As we approach August things will likely quieten down as they generally do over the holiday period however there is always Donald Trump to keep people on their toes! This morning’s one print of note has been a slightly better than expected German IFO Business Climate survey which came in at 101.7 rather than 101.6 predicted. The survey has taken a big leg down of late printing 114.7 in March before dropping to 102.1 in April as Trump-fueled trade concerns weigh on German business sentiment. GBP/EUR is a little higher currently trading around 1.1245.

 

 

 

  Australian Dollar

GBP / AUD Expected Range: 1.7680 – 1.7790

Australian inflation undershot a little overnight with the overall reading missing target coming in at 0.4% q/q slightly lower than the 0.5% that has been penciled in by the markets. The accompanying Trimmed Mean reading, that strips out the most volatile 30% of products used to measure price rises hit the 0.5% that had been expected. The slight miss means rate hike expectations will have been pushed deeper into 2019 especially with the trade concerns weighing over China, Australia’s biggest trading partner. AUD/USD has fallen from .7435 to sit around 0.74 at present. GBP/AUD is around 1.7760.

 

 

 

  Canadian Dollar

GBP / CAD Expected Range: 1.7240– 1.7350

Today’s US Crude Oil Inventories is expected to show a drop of 2.6m barrels held by US business’ last week. This is today’s only piece of top-tier data that will likely impact the loonies value. Moves later in the week will come from the aforementioned ECB rate decision and more likely the US GDP number. The next domestic data-set that will move CAD is Tuesday’s monthly GDP print. GBP/CAD sits at 1.7290.

 

 

 

  New Zealand Dollar

GBP / NZD Expected Range: 1.9270 – 1.9390

The Kiwi dipped overnight as Trade Balance figures showed a NZD113m deficit when a NZD200m surplus had been predicted for June. Extra downward pressure was exerted by the Australian inflation miss seeing NZD/USD dropping as low as .6785 when it has been at .6810 a few hours earlier. GBP/NZD is at 1.9330.

 

 

 

Posted by OFX

Markets focus on todays all important Australian CPI

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar throughout Tuesday’s Asian session remained under pressure and stayed below 74c on the back of renewed US Dollar buying interest. However an advance in both Copper and Zinc prices both up more than 2% pushed the AUD/USD pair through short-term resistance touching an eventual high of 0.7434 in the early hours of New York. The Aussie led the advance in the G10 currencies and preformed the best moving from a low of 0.7360 to a high of 0.7434.

With no major data releases yesterday, investors remained mindful of Trump’s displeasure over the Fed’s monetary tightening claiming that their plans to raise U.S. interest rates risked undermining his efforts at strengthening the economy.

All eyes will be focused today on Consumer Price Index (CPI) figures which should freshen the debate as to when the RBA are likely to raise rates again. The headline reading for inflation is expected to pick up in the second-quarter of 2018. Markets are expecting to see a small jump from 0.4% to 0.5% q/q and 2.3% y/y. This would put the inflation rate back within the confines of the RBA’s 2% to 3% target band.

Initial support is seen at 0.7400 and 0.7345, resistance up at 0.7460 and 0.7500

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0830 – 1.0970

The New Zealand dollar pushed back through 0.68 U.S cents as risk appetite gained broader traction on news China will support easing monetary policy and increase fiscal stimulus into the end of the year. Equities have rebounded some 5% since Friday’s close and the yuan stabilized above 13 month lows allowing the Kiwi to shrug off yesterdays softening and push back toward resistance at 0.6820.

While one of the day’s top outperformers the Kiwi still struggled to push through key technical stops and faltered on approaches nearing 0.6820. Much like its antipodean counterpart the NZD appears largely range bound constrained by broader global trends and longer term expectations of neutral monetary policy.

With support at 0.67-0.6720 attentions turn to Junes trade balance print today for short term guidance. Anything short of a $200million surplus could put pressure on the Kiwi and prompt a shift back below 0.68.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7620 – 1.7880

The Great British Pound is slightly stronger this morning when valued against its US counterpart reaching a 24-hour high of 1.3158 on the back of positive UK data and Brexit headlines. Prime Minister Theresa May confirmed to parliament she will lead the Brexit negotiations taking personal control of European Union withdrawal.

On the data front yesterday CBI (Confederation of British Industry) Industrial Trends survey revealed that new orders continued to expand with the index at 11 vs. the expected 9. As a result manufacturing growth accelerated to its strongest pace in a year while a slight slowdown in new export orders. Looking ahead today and we will see the release of Mortgage Approvals which forecast to show a rise of 39k in June from 39.4k in the previous month of May.

From a technical perspective, the GBP/USD pair is currently trading at 1. 1.3144. We continue to expect support to hold on moves approaching 1.3080 while now any upward push will likely meet resistance around 1.3155.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7320 – 0.7480

Risk sentiment took another twist in overnight trading with the market responding strongly to rebounds in commodity markets and equities in China. The risk-on environment led to a marginal softening of the Greenback with the US Dollar Index now treading water at 94.61, a measly 0.02% lower. Ultimately however, commodity currencies are higher against the United States Dollar with most other majors remaining relatively flat.

With a mostly benign day on Twitter, attentions turned towards China which recently announced policy measures to add liquidity and encourage banks to lend more to small business’. The PBOC also mentioned measures to ease monetary policy and ramp up fiscal policy. China did fall short of announcing a big stimulus package but nevertheless the direction was clear, and the market responded accordingly. Chinese equities were boosted by approximately 5% since Friday with commodity prices also benefiting. USD/CNY dipped slightly below 6.8, reversing the upward trajectory the Greenback has been on. Commodity currencies also recovered strongly with he Aussie being the best performer, up almost 0.5%.

The Greenback is now set to enjoy a quiet economic calendar for Wednesday with direction to be determined by the headlines and off-shore risk events.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6380

The Euro closed slightly stronger yesterday in line with the PMI Eurozone data that came almost flat versus expectations. EURUSD closed 0.04% up at 1.1687 and just shy of the 55-day moving average at 1.1705.

Next focus will be EU Juncker’s meeting with Trump and the press has suggested there will be no offer on tariffs. On the other side, Trump said tariffs are good because is a good way to hit countries that don’t want to negotiate a fair deal.

Range trading will probably continue within 1.1650 and 1.1750 until we get further insights either from auto tariffs or from expectation ahead of Thursday ECB meeting.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9700 – 0.9820

The USDCAD continued trading within the short-term range of the last sessions but the CAD managed to close 0.12% stronger versus the USD at 1.3155.

The USD ended the day relatively unchanged versus a basket of major currencies but commodities and resource-based currencies performed well against the USD amid China’s fiscal stimulus plan.

A pretty light close to the week for Canada from the data front but the loonie will probably move relatively to the USD based on the next run of tariff talks between the US and Europe plus NAFTA negotiations between the US, Canada and Mexico.

 

 

 

Posted by OFX

The Market Direction Remains Fixated on Trade Tensions

OFX Daily Market News

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  United States Dollar

Having touched 12-month highs the U.S Dollar index moved sharply lower following President Trump’s proclamation of concern regarding the strong performance of the world’s base currency. Trump suggested the “strong currency was putting the United States at a disadvantage, making our exports more expensive.” The comments forced the Dollar downward against Yen touching 1-week lows while the Euro bounced back through 1.16 advancing some 100 points having touched intraday lows at 1.1576.

This is not the first time Trump has voiced his displeasure with the strength of the US Dollar, however, his attack on the Federal Reserve and its policy of monetary policy tightening, a core driver of recent USD strength, raising concerns as to the independence of the Federal Reserve. Having fallen one tenth of a percent, the dollar correction was contained mainly as investors assessed the likelihood the President would weigh in and disrupt the sovereignty of the FOMC and Federal Reserve, however, Trump’s comments add another variable that needs to be considered when assessing long-term expectations.

Attentions remain squarely fixed on political pressures with little macroeconomic data on hand to drive broader direction into the close.

  Canadian Dollar

USD / CAD Expected Range: 1.3072 – 1.3157

The loonie couldn’t capitalize on the Trump Headlines and the subsequent USD correction, ending the session 0.8% weaker with USDCAD closing above the critical 1.3250 level at 1.3273. Recent NAFTA Headlines signaling the US might be keen to negotiate the agreement first with Mexico haven’t been CAD supportive, but the USDCAD was still trading below 1.32 during the Asian session.

As the European session started with UK missing on Retail sales data and CNH continuous weakening, the USD gained momentum. The CAD was then pressured downward following US Auto tariffs prospects and a weak ADP Canadian employment report (-10.5k jobs in June). USDCAD reached a new monthly high at 1.3290 before correcting slightly to 1.3273 after Trump headlines.

The Canadian dollar opens the North American session a full percent higher against the US dollar. The catalysts that have given the loonie strength today were positive Retail Sales and inflationary numbers. Retail Sales for May posted 2.0% vs. estimates of 1.1% and CPI year over year for June printed at 2.5% vs. previous of 2.2%. The robust economic fundamentals have given market participants room to factor in a more probable cause for the Bank of Canada to raise interest rate hikes at the end of the year.

  Euro

EUR / USD Expected Range: 1.1626 – 1.1715

The EURUSD ended the session slightly higher at 1.1642 after being down more than 0.60%, below the critical 1.16 level, at 1.1575. It was all USD strength that followed through the Asian session on some risky Headlines coming from China plus the continuation of CNH depreciation and then the robust US Jobless numbers. Enter Trump. Someone released some Headlines from an interview with the US President, that’ll be published later today, stating that he was “not thrilled” about the Fed hiking rates and the subsequent USD strength against the Euro, and the Chinese currency. Euro jumped more than 0.6% to 1.1678 on the news before reversing gains and settling below 1.1650.

Levels to watch, in the short term, we should focus on Yesterday’s high/low 1.1575/1.1678

  British Pound

GBP / USD Expected Range: 1.2995 – 1.3084

The torrid week for sterling continues. Having flirted with 1.33 against the USD on Monday morning yesterday’s disappointing retail sales figures saw it bounce off mid 1.29 instead. All in all the pound has lost nearly 2.5% of its value against the USD whilst it has also finally broken out of its narrow trading range against the Euro.
World Cup spending on alcohol and BBQ food couldn’t offset the drop in spending elsewhere and once again the headline figures has contracted for a third time this year as retailers flocked away from traditional storefronts with the good weather tempting people outside. Any gains that sterling made against the Euro in March and April have slowly eroded with GBP/EUR hitting 19 week lows. Similarly GBP/USD has hit fresh 10 month lows.

What does this mean moving forward, and is there any reprieve for the pound? Well, with a Bank of England interest rate decision just around the corner (August 2nd) the market was pricing in around an 83% chance of a hike at the start of the week but this could be thrown up in the air. The only hope for sterling bulls and Bank of England interest rate hawks is that private consumption only plays a small part in the UK’s GDP figures and it has always been a volatile figure to forecast.

  Australian Dollar

AUD / USD Expected Range: 0.7318 – 0.7413

The Australian Dollar opens this morning marginally lower than yesterdays’ open as commodity currencies underperformed in overnight trading. It was a wild ride for the Aussie, which initially saw very positive employment figures drive up its value to 0.7441, only for the American trading session to unwind those gains and then some. Changing hands this morning at 0.7357, the Aussie looks to tread water to close out the working week.

The big headline of the day was, of course, the 50.9k jobs that were added to the Australian economy. The news soundly beat all analyst expectations and saw the Australia Dollar appreciate significantly to 0.7441. From there it was a day to forget with the industrial metal prices reflecting slowing growth concerns in China. Copper fell 1.5%, taking its declines since the start of June to 17%. Zinc, Nickel and Lead prices also slid in the decidedly bearish market. Compounding, the commodity concerns was the softness of the Chinese Yuan which hit a new low for the year. Overall, the Aussie fell over 1.5% from its high at 0.7441.

Looking forward, the Aussie is set to enjoy a quiet domestic calendar to close out the week, a welcome environment considering the recent trading. Off-shore, risk-events are relatively limited with attention mainly focused on the G20 summit kicking off today in Buenos Aires.

  New Zealand Dollar

NZD / USD Expected Range: 0.6720 – 0.6799

The New Zealand Dollar could not sustain movements above the 68 US cent handle, opening at 0.6795 yesterday morning as US Dollar strength continued its momentum. The US Dollar index (DXY) reached new highs overnight after a robust Philly Fed Manufacturing print and United States unemployment claims, causing the NZD/USD cross to fall steadily back to intraday lows of 0.6715.

A sharp spike higher though for the Kiwi occurred during the North American session as President Donald Trump in an interview with CNBC said that a stronger dollar “puts us at a disadvantage” and is currently unhappy with the current Federal Reserve monetary policy tightening.

The Kiwi rebounded to 0.6760 following Trump’s comments before drifting lower on open this morning to 0.6745. With only Visitor arrival numbers released domestically this morning, markets will look towards G20 meetings in Buenos Aires this weekend for further stance on simmering trade tensions.

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The Canadian Dollar’s Value to be Determined by the Broader Market Sentiment.

OFX Daily Market News

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  Canadian Dollar

The loonie couldn’t hold onto the Asian session gains, which saw the USDCAD trade as low as 1.3115, and ended up the session 0.20% weaker versus the USD at 1.3172.

The pickup in US yields and broad USD strength saw the loonie reversing gains, and the drop in WTI prices further accentuated the correction.

USDCAD continued to trade it trend channel of 1.3115 /1.3189 range, levels that will be acting as support/resistance in the short-term. There are no Canadian economic releases this week for Canada; therefore, the loonie will trade on the broader market participant sentiment.

 

 

 

  United States Dollar

USD / CAD Expected Range: 1.3115 – 1.3189

The United States Dollar shook off President Trump’s Friday tweets in overnight trading to begin its recovery against a number of the major currencies. The US Dollar Index is up 0.28% this morning, as demand for the greenback returned to the market

The Catalyst for the reversal of fortunes, albeit small, was the upbeat data from the Federal Reserve Bank of Chicago which showed the National Activity Index rose to 0.43 in June. However, the good news was significantly counter-balanced by a 0.6% reduction in existing home sales. The excellent start continued for the Greenback, however, as commodity currencies began to depreciate against the USD when China announced it would inject $74b of liquidity into the market, further easing their accommodative monetary policy. The CNY immediately plunged 0.4% which contributed to declines across the board for commodity currencies. The Greenback strengthened further again, as rumors of tweaks at the Bank of Japan to monetary policy reverberated around the market, driving global bond yields higher and increasing demand for the US Dollar. Overall, it was a perfect storm for the United States as sentiment dictated direction for much of the day.

Moving into Tuesday morning a relatively quiet domestic docket for economic releases. Markits Manufacturing and Services PMI figures will be released at 9:45. Followed by the Richmond Fed’s Manufacturing Index at 10 am.

 

 

 

  Euro

CAD / EUR Expected Range: 0.6487 – 0.6504

The monthly tranche of PMIs has been released this morning with a mixed bag of results is shown. The Eurozone’s purple patch of expansion seen late last year has been replaced with a more modest pace of output of late highlighted by the reduction in PMI figures. German manufacturing for July printed 57.3 beating expectations but some way off the series of >60 readings we saw either side of Christmas. Eurozone Manufacturing as a whole came in at 55.1 ahead of the 54.7 forecast. The EZ Services number printed 54.4 slightly worse than the 55.0 predicted. This week’s main event from the euro is the ECB Interest Rate decision due on Thursday. No change in policy is all but guaranteed however the market’s focus is the timeframe of when the ECB will look to tighten policy. Rates are currently predicted to be raised in the H2 2019, so any hints that it will be sooner will likely see a euro rally. GBP/EUR is at 1.1220.

 

 

 

  British Pound

CAD / GBP Expected Range: 0.5784 – 0.5801

After the tumultuous Trump tweets, we saw on Friday, and over the weekend it was a relatively quiet start to the week in the FX space from the pound’s perspective. GBP/USD has fallen back towards 1.31 over the past 24 hours as the dollar retraces some of its Trump driven losses. There was no top-tier UK data yesterday however one piece of news to catch sterling holder’s eyes was at a forum in Liverpool where Bank of England Deputy Governor, Ben Broadbent stated he hadn’t decided on whether to vote for a rate hike next week. Broadbent is seen as a dove amongst the Monetary Policy Committee, so it could be seen as a hawkish signal that he’s contemplating voting to raise rates. Chances of a hike are around 80% currently. GBP/USD hovers around 1.31 ahead of another quiet day for sterling.

 

 

 

  Australian Dollar

CAD / AUD Expected Range: 1.0252– 1.0300

Having opened a shade above 74c at the start of the Asian session, the Australian Dollar came under selling pressure as Monday kicked into full swing. The AUD/USD touched a low of 0.7373 against the US Dollar, and with little local data, the Aussie remained centered on Chinese currency developments. China’s central bank injected 502 billion Yuan to financial instructions via its one-year medium-term lending facility (MLF) with rates unchanged, a move which was unexpected by the market.

Weighing further on the Aussie was U.S data released by the Federal Reserve Bank of Chicago. The National Activity Index boosted by the upbeat production-related indicators jumped up to 0.43 in June from -0.45 in May a move that pushed the US Dollar index higher. On the commodity front, oil, gold and base metal prices were all a tad lower.

The economic calendar is light ahead of tomorrow’s CPI. We see immediate support at 0.7345 and resistance can be seen at 0.7421

 

 

 

  New Zealand Dollar

CAD / NZD Expected Range: 1.1159 – 1.1204

The New Zealand Dollar gave up gains enjoyed into last weeks close through trade on Monday as deeper depreciations in the CNY weighed on the unit. Having touched intraday highs at 0.6825, the NZD gapped lower and fell back through 0.68 to reach 0.6775 and open buying just 0.6784 U. S Cents.

Despite reasonable and improving domestic economic performance New Zealand’s exposure to a global slowdown, in particular, the Chinese value chain has driven the Kiwi to record short positions and been a primary catalyst for the renewed downside. However recent strength across commodity prices has helped firm support on moves toward 12 months low and 0.67.

Attentions remain with ongoing geopolitical developments as the primary driver through the short term with the macroeconomic focus on the Bank of Japan and reports the monetary policy framework may shift come next week’s policy meeting. The impact on global bond markets was significant and may force a short-term correction in direction.

 

 

 

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Aussie softens again having failed to break resistance

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  Australian Dollar

Having opened a shade above 74c at the start of early Asian session, the Australian Dollar came under selling pressure as Monday kicked into full swing. The AUD/USD touched a low of 0.7373 against the US Dollar and with little local data the Aussie remained centred on Chinese currency developments. China’s central bank injected 502 billion Yuan to financial instructions via its one-year medium-term lending facility (MLF) with rates unchanged, a move which was totally unexpected by the market.

Weighing further on the Aussie was U.S data released by the Federal Reserve Bank of Chicago. The National Activity Index boosted by the upbeat production-related indicators jumped up to 0.43 in June from -0.45 in May a move that pushed the US Dollar index higher. On the commodity front, oil, gold and base metal prices were all a tad lower.

 

The economic calendar is light ahead of tomorrow’s CPI. We see immediate support at 0.7345 and resistance can be seen at 0.7400

  New Zealand Dollar

AUD / NZD Expected Range: 1.0830 – 1.0970

The New Zealand Dollar gave up gains enjoyed into last weeks close through trade on Monday as deeper depreciations in the CNY weighed on the unit. Having touched intraday highs at 0.6825 the NZD gapped lower and fell back through 0.68 to touch 0.6775 and open buying just 0.6784 U. S Cents.

Despite reasonable and improving domestic economic performance New Zealand’s exposure to a global slowdown, in particular the Chinese value chain has driven the Kiwi to record short positions and been a primary catalyst for the renewed downside. However recent strength across commodity prices has helped firm support on moves toward 12 month low and 0.67.

Attentions remain with ongoing geo-political developments as the primary driver through the short term with macroeconomic focus on the Bank of Japan and reports the monetary policy framework may shift come next weeks policy meeting. The impact on global bond markets was significant and may force a short term correction in direction.

  British Pound

GBP / AUD Expected Range: 1.7620 – 1.7880

The Great British Pound is slightly weaker this morning when valued against its US counterpart reaching session high yesterday of 1.3157 before settling around 1.3100 on the back of and another round of negative Brexit headlines. Investors have been selling-off their Sterling positions ever since former Foreign Secretary Boris Johnson and Chief Brexit negotiator David Davis resigned from their relative Government positions. Looking ahead today the Pound Sterling will most likely follow any continued Brexit politics.

 

On the data front today in the UK and its fairly light on the macroeconomic calendar with the only release CBI (Confederation of British Industry) Industrial Order Expectations. Data from the CBI survey is closely watched by the market and often gives a timely indication of economic trends. The survey forecast is to come out at 10 from 13 previously.

 

From a technical perspective, the GBP/USD pair is currently trading at 1. 1.3080. We continue to expect support to hold on moves approaching 1.3100 while now any upward push will likely meet resistance around 1.3155.

  United States Dollar

AUD / USD Expected Range: 0.7320 – 0.7430

The United States Dollar shook off President Trumps Friday tweets in overnight trading to begin its recovery against a number of the major currencies. The US Dollar Index is up 0.28% this morning, as demand for the greenback returned to the market.

 

The Catalyst for the reversal of fortunes, albeit small, was the upbeat data from the Federal Reserve Bank of Chicago which showed the National Activity Index rise to 0.43 in June. However, the good news was significantly counter-balanced by a 0.6% reduction in existing home sales. The good start continued for the Greenback however, as commodity currencies began to depreciate against the USD when China announced it would inject $74b of liquidity into the market, further easing their accommodative monetary policy. The CNY immediately plunged 0.4% which contributed to declines across the board for commodity currencies. The Greenback strengthened further again, as rumours of tweaks at the Bank of Japan to monetary policy reverberated around the market, driving global bond yields higher and increasing demand for the US Dollar. Overall, it was a perfect storm for the United States as sentiment dictated direction for much of the day.

 

Moving into Tuesday, the United States turns to a fairly quiet domestic docket with only Markits Manufacturing and Services PMI figures and Richmond Fed’s Manufacturing Index to excite markets.

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6380

The Euro was not able to continue with the strength seen on the Asian session, which saw EURUSD reaching a high of 1.1750, and closed 0.30% weaker at 1.1692.

The USD started the week weaker versus all major currencies following a report that ignited a spike in Japanese yields and the JPY. But traders turned their attention onto the US earning season and expectations of a strong GDP number this week. The JPY turned around, US yields spiked and the USD followed.

Support for the EURUSD is sitting at the June 5 low of 1.1653 while 1.1750 should continue to act as resistance.
This week will bring PMI numbers plus the ECB meeting.

  Canadian Dollar

AUD / CAD Expected Range: 0.9680 – 0.9780

The loonie couldn’t hold onto the Asian session gains, which saw the USDCAD trade as low as 1.3115, and ended up the session 0.20% weaker versus the USD at 1.3172.

The pickup in US yields and broad USD strength saw the loonie reversing gains and the drop in WTI prices further accentuated the correction.

USDCAD continued to trade in the new 1.31/1.32 range, levels that will be acting as support/resistance in the short-term.

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Canadian Dollar Holds Friday’s Gains.

OFX Daily Market News

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  Canadian Dollar

Great close to the week for the loonie, trading back below 1.3150, more than 1% stronger versus the greenback to USDCAD 1.3130.

It wasn’t only the broad USD weakness following Trump’s comments that helped the CAD but also the positive performance of commodities and Canadian yields. Retail sales came stronger for May at 2% (versus 1% expected) while CPI for June came at 2.5% (versus 2.3% expected), both supportive of higher interest rates and thus a stronger CAD.

This week will bring wholesale trade sales, possibly a good indicator of how the trade war drama is affecting the sector. From a technical perspective, we’ll have to see if the loonie is able to break below 1.31 or if we will again start trading within the 1.31/1.32 range in the short-term.

 

 

 

  United States Dollar

USD / CAD Expected Range: 1.3115-1.3161

President Donald Trump was again the catalyst for volatility in the market, single-handedly forcing the US Dollar Index (DXY) lower. His comments and tweets were vast and varied in their targets, ranging from foreign rivals, allies, and even domestic institutions. Ultimately the DXY Dollar Index shed 0.7% to open this morning at 94.48, extending its’ losses to 1.25% lower than the year to date high of 95.65.

The barrage began initially with President Trump again accusing China and the EU of manipulating their currency and interest rates lower, further aggravating tenuous global relations. The Tweet continued to also include the independent Federal Reserve, with Trump highlighting their role in the stronger Greenback and noting “…the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge.” The market took the news poorly for the USD and immediately began to fall against its counterparts. Punters can clearly see that Trump prefers a lower US Dollar but the Federal Reserve is an independent body with their mandate and is unlikely to be swayed from their tightening plans. Nevertheless, the market entered another period of volatility. Closing out a busy Friday for the President was his comments to CNBC outlining his willingness to “go to 500”, in reference to the on-going trade war with China.

Attention this morning turns to existing home sales in the US released at 10 am. Later this week and the most significant economic data coming from the US on Friday with annualized GDP for Q2 expected at 4%.

 

 

 

  Euro

CAD / EUR Expected Range: 0.6481-0.6506

As we near August we get closer to what is typically a quiet period for the Eurozone as traders and business’ take time off and head to the beach for a break. This week’s main event, which is likely to be a non-event, is the European Central Bank interest rate decision with little expected from ECB head, Mario Draghi. Last month we saw confirmation of the end of QE and its unlikely we will hear any change in tone re: timing of future rate hikes. Tomorrow morning sees the monthly PMI readings from around the bloc with little change in the main gauges predicted as a general slowdown in output permeates the EZ. GBP/EUR trades at 1.1210.

 

 

 

  British Pound

CAD / GBP Expected Range: 0.5783-0.5813

GBP/USD retook the 1.31 handle on Friday afternoon after looking in danger of breaking below 1.2950 a day earlier. Sterling has been under pressure of late as political concerns re: Brexit weigh on the currency with political in-fighting and high profile resignations in PM, Theresa May’s cabinet. Some of these losses were reversed on Friday as US President, Donald Trump again rattled markets with a series of tweets over trade and currency. The one that weakened the dollar leading to sterling’s recovery stated: “China, the European Union, and others have been manipulating their currencies and interest rates lower, which the US is raising rates while the dollar gets stronger and stronger with each passing day – taking away our competitive edge. As usual, not a level playing field…” he went on “…The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates – Really?” The tweets saw the dollar sold off across the board coming to sterling’s aid when it looked like cable could get stuck below the 1.30 handle. There is little data of note from the UK this week however next week’s schedule is packed, including what will likely see only the second interest rate hike from the Bank of England since the financial crisis. GBP/USD sits at 1.3145.

 

 

 

  Australian Dollar

CAD / AUD Expected Range: 1.0250-1.0296

On Friday, the Australian Dollar suffered a massive sell-off during the Asian session sparked by the People Bank of China’s decision to devalue the Yuan by the most since 2016. The PBOC raised the yuan reference rate by 605 pips to 6.7671 – the most significant single-day jump in over two years, the AUD/USD lost 30 pips straight off the bat falling from 0.7350 down to 0.7318. The timing of the massive CNY devaluation indicates the world’s two biggest economies are likely moving towards a full-fledged currency war. Consequently, the AUD and Asian currencies have come under pressure.

The local unit recovered offshore as President Trump blamed China for manipulating their currency and again criticizing the Fed for raising rates. Treasury Secretary Steve Mnuchin tried to walk back Trump’s criticism of Fed rate hikes and comments on currency manipulation, saying the president respects central bank independence and is not trying to interfere in FX markets. The AUD/USD gathered momentum and moved back towards the 74c handles closing Friday’s session at 0.7403.

Look ahead; the Australian economic calendar is light until Wednesday where we see Q2 CPI.

 

 

 

  New Zealand Dollar

CAD / NZD Expected Range: 1.1154-1.1218

Buoyed by broad-based USD weakness the New Zealand dollar was the day’s top performer on Friday, jumping back through 0.68 U.S Cents. The Greenback dropped against major counterparts after President Trump doubled down on his disdain of the Federal Reserve and their current dogma of tightening monetary policy. The President took to Twitter to dispel his displeasure at China and the EU for deliberately manipulating currencies and interest rates while the Fed continues to hike baseline interest rates and place unfair upward pressure on the USD.

Rallying to touch intraday highs at 0.6810 the Kiwi found renewed support in stronger commodity prices however looks stretched approaching resistance at 0.6850. With speculative shorts still at records highs, the NZD remains vulnerable to correction and a move back below 0.67 as attentions turn to Wednesday’s Trade Balance print as the only big-ticket item on to docket moving into the week ahead.

 

 

 

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Guide to Expanding your Business Internationally

Great tips on what you should know about growing your business globally. Jason Kumpf, of OFX Global Money Transfers, offers a brief guide that some of his clients use to expand abroad successfully.

OFX – Great tips on what you should know about growing your business globally.

Jason Kumpf, of OFX Global Money Transfers, offers a brief guide that some of his clients use to expand abroad successfully.  With advanced technology, free trade agreements, and globalization, it’s easier than ever to grow your business operations into overseas markets. Managing your currency exposure may give you the competitive edge you need to protect your profits abroad.

In this guide, Jason Kumpf from OFX will help explain:

  • Statistics regarding how many companies are expanding overseas
  • The best markets to expand into
  • What you should consider before going overseas
  • How to protect yourself against currency exposure
  • The best ways to bring your profits home
  • How to transfer profits from online marketplaces

 

How many businesses are growing overseas?

Jason Kumpf from OFX tells us that more and more businesses from all over the world are taking the leap into the international marketplace.

According to a new DMCC report, 42% of businesses in the United Kingdom are exhibiting interest in working overseas, particularly following the Brexit vote to leave the European Union. Business owners in the U.K. are hoping to expand into attractive emerging markets, while establishing a stronger global presence and accessing the wealth of available resources and talent that can be found abroad.

Of course, Jason Kumpf also wants us to remember that U.K. businesses aren’t the only ones looking abroad. According to the United States Chamber of Commerce, 80% of the planet’s purchasing power, along with 95% of the globe’s customers, are found outside of the U.S. Experts know that profits are going to be found in the large emerging markets of the world, where a growing middle class is providing a market for a variety of services and goods.  In 2016, 47% of businesses in the U.S. stated that they expected their profits from international activity to rise that year, and 87% of companies agreed that expansion overseas is necessary for long-term growth.

Australian businesses are also finding that investing overseas can help them remain competitive despite the evolving trade landscape around the globe. Jason Kumpf from OFX also mentions that the top locations for foreign affiliates of businesses include New Zealand, the United States, the United Kingdom, Hong Kong, and Singapore. And one-third of the country’s top 2,000 businesses have investments in an offshore market, with manufacturing brands investing in the highest number of overseas businesses.

 

Which countries are considered the best for business?

Jason Kumpf says that working with clients around the world has educated him on the fact that different markets provide different opportunities for business expansion. Only you can decide which market will be optimal for your unique business proposition. However, some countries are more friendly to foreign businesses than others. These have been named the best countries for business by Forbes:

  • Sweden
  • New Zealand
  • Hong Kong
  • Ireland
  • United Kingdom
  • Denmark
  • Netherlands
  • Finland
  • Norway
  • Canada
  • Australia
  • Singapore

 

Top 5 things to consider before doing business overseas:

  • Your USP may be more viable in one market than another. Be cautious before entering a market where your competitors are already operating as there may be cultural nuances that affect your ultimate success in a given market. Resist the temptation to follow your competitor into a market without the necessary market research for your brand.
  • Your brand may need an update. Consider how your brand will translate in an overseas market in both visual and verbal application. Find the best way to communicate your brand story in a totally new market with totally new customers.
  • You’ll be due for a business trip. Anytime you’re expanding overseas and especially if you’re selling online, you may want to visit a country before deciding whether or not you will do business there. Consider hiring a guide or translator with connections in your industry, so that you can see the competition up close. A guide may help you find new distribution channels or networks to speed up your supply chain and can assist you with understanding typical employee expectations if you’re tapping into the local workforce.
  • You may need to invest in your legal team. Ensuring your business complies with local laws and regulations is essential for expanding your business abroad. Of course, legal counsel with strong local knowledge will also help you establish agreements with partners and employees.
  • You’ll need to check in often. Jason Kumpf mentions that in addition to managing your business at home, you will need to be in regular communication with your sales reps, distributors, and colleagues overseas, so budget your time and resources accordingly.

 

How can you protect yourself against currency exposure?

One of the biggest challenges of doing business abroad is currency fluctuations. Hardly a week goes by without a news report of a major currency move. Jason Kumpf says this is an area where having a focused FX group transacting for you can be useful.  That’s why it’s essential to protect your payments to overseas staff and suppliers by developing a sound currency strategy.

 

Top 5 ways to reduce currency exposure

  • Consider hedging. You can use a Forward Exchange Contract to lock in a preferred exchange rate for up to 12 months, so you can keep your cash flowing as predicted.
  • Lock in a Limit Order. If your money transfer dates are flexible, use a Limit Order to set your target exchange rate. When the rate is right, you just confirm the transfer, so you can stay on top of the markets even while you’re out playing golf.
  • Reduce the amount of time between an invoice and a transaction’s settlement. Jason Kumpf mentions that this is an obvious benefit for any business but is sometimes overlooked. Doing so may help protect your company against extreme currency fluctuations that could hurt your bottom line.
  • Negotiate all contracts with currencies in mind. Many suppliers prefer to be paid in currencies like USD, EUR, or AUD. Major currencies may be less susceptible to large fluctuations than emerging market currencies, which could benefit your business. That said, if your supplier is converting costs in Indian rupees into dollars, they could potentially overcharge you on the exchange rate unless you have one specified in the contract.
  • Stay informed. Once you go global, market movements start to matter more. Sign up for a daily or weekly FX update to get the news you need.

 

What is the best way to bring your profits home from abroad?

Jason Kumpf from OFX mentions that can help you save up to substantially in exchange rate margins on any bank-to-bank transfer across 55 currencies. For major currencies, margins can be up to 75% less than what the banks charge, so you can keep more of your hard-earned cash. On top of that, our delivery times are often faster, because we use local banking networks to move your money whenever possible. That means we can often offer same day or next delivery to major markets.

 

What is a good way to transfer profits from online sales overseas?

Depending on the size and scope of your international business you may or may not be eligible to get a bank account abroad without residency or investment minimums. If you’re selling online, that can mean expensive fees and costs when bringing your revenue across borders on marketplace like Amazon and Ebay. Jason Kumpf mentions that some platforms have solved this problem for Online Sellers. With our Online Sellers account, it’s as if you had a local bank account in all your major markets: USD, EUR, GBP, AUD, HKD, CAD and JPY.

If you are one of the many businesses that have expanded internationally by selling on marketplaces like Amazon, eBay, Walmart, Groupon, and Rakuten, Jason Kumpf form OFX reminds us that you can use your foreign exchange platform to swiftly and securely bring your money home. In doing so, you could save substantially on foreign transaction fees and margins.

While online marketplaces often charge margins of nearly 4% on cross-border payments, Jason Kumpf of OFX mentions that FX platforms may only charge 1.5% or less above the daily market exchange rate, depending upon how much you are transferring.

You can even use your foreign exchange platform to send payments to your suppliers. You can also automate the delivery of your funds or choose when to transfer the money, giving you more control over your profits.

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