Your daily news portal

Posted by portugalpress on August 24, 2018

The release of the British government’s first 25 of its 80-plus papers addressing the management of a no-deal Brexit was the biggest mover and shaker this week. Whilst investors still see little chance of a no-deal outcome actually occurring, it was clear that they did take note of the document, taking into account the worse-case scenario described in the papers. The pound suffered close to year-long lows after Dominic Raab’s address. Raab attempted to appease concerns, calling the documents released a ”practical and proportionate” approach to the threat of the disruption that could be caused by the event of a no-deal Brexit. The pound dipped further after the Chancellor, Philip Hammond, warned of, “large fiscal consequences” if the government fails to secure a trade deal with the EU.

Earlier in the week there had been more confidence from investors as Raab announced that EU citizens will be able to remain in the UK after Brexit, demonstrating negotiations were taking place with the EU. But, the release of the papers have left investors worried about the likely-extreme negative consequences of not securing a deal with the EU, no matter how unlikely the event could be.

The euro had a largely successful week, mostly keeping a low profile. The worrying development of Turkey’s economic status faded this week, which took pressure off the euro. The release of economic statistics throughout the week provided no massive surprises and as such, the euro felt small strengths against the US dollar and the pound.

In the US, Trump was definitely making the biggest waves in strength (or weakness) of the US dollar. At the beginning of the week, Trump broke protocol again and criticised the Federal Reserve for continuing to raise interest rates. In an interview with Reuters on Monday, he said, “During this period of time I should be given some help by the Fed. The other countries are accommodated.” The following day, news broke that Trump’s ex lawyer, Michael Cohen, had pleaded guilty to eight counts of campaign finance violations and was willing to talk about Trump’s role in said violations. Paul Manafort, the president’s former campaign chairman, was also found guilty of eight charges relating to bank and tax fraud, as well as failure to disclose his foreign bank accounts. This news led investors into a state of concern over the potential of impeachment of the president and the political uncertainty that would bring.

The US dollar was saved in the back end of the week as trade talks with China came to a halt, with no real progression. There is likely to be further tariffs on trade coming into force in September and with no quick resolution on the horizon, the US dollar rallied.
Economic statistics played a large role in the performance of the Canadian dollar this week. Investors had been surprised by the CPI inflation reading from the previous week, coming in at 3.0%, 0.5% above what had been expected. The CPI inflation reading release saw the Loonie make gains at the beginning of the week, but this was to be short lived. Wholesale sales data, released on Tuesday, were predicted to demonstrate a 0.8% increase; unfortunately, there had been a 0.8% decline. This disappointing ecostat only compounded the ongoing worry of uncertainty about trade with the United States and the upward pressure on US interest rates.
Turmoil in Australian politics has been top of the headlines this week. Power struggles within the Australian government has seen another short-lived ruling come to an end as Malcolm Turnbull was ousted and replaced by Scott Morrison, the former finance minister. Fortunately for the Australian dollar, the US political troubles gave the Aussie the strength to hold firm against the US dollar, but lost to sterling.

New Zealand has managed to stay quiet in the continuing global trade war and a handful of positive economic statistics kept the New Zealand dollar unchanged for the most part. It had made some gains against its Australasian neighbour, as Australia fought to prove solidity within the government. But gains slowed as the former prime minister was replaced.

For competitive exchange rates, low transfer fees, expert guidance and the special offer of your FIRST TRANSFER FREE call moneycorp on freephone 800 785 012 or visit www.moneycorp.com/portugal-resident

Categories: 

News Stories