FX DAILY | 07.08.2019 | Marc-André Fongern

CURRENCY INSIGHTS - 07.08.2019 | MAF Global Forex

USD : I don't see any reason for a sustained weakening of the dollar. In the face of numerous global uncertainties, the currency is more in demand than ever. Interest rate differentials are unlikely to have any impact on the arithmetic of exchange rates for the time being. Basically, Donald Trump's hands are tied, whereas his desire for a softer dollar is unlikely to come true, at least not as long as the trade dispute keeps escalating.

Germany - EURUSD : The German economy is heading almost inevitably for recession, as the industrial sector in particular remains under considerable pressure, while new orders are largely absent. Unfortunately, the economic outlook has deteriorated even further. In view of an intensifying trade war, it can still be assumed that Europe's exceptionally weak economic growth might increasingly become a risk factor for the euro. It should be borne in mind that the ECB's room for manoeuvre is rather restricted.

RBNZ - NZDUSD / AUDUSD : The 50 basis point interest rate cut by the RBNZ is indeed quite surprising and is likely to discourage the NZ dollar for the time being, as further rate cuts are to be expected. Undoubtedly, the central bank seems to be in a state of panic, largely due to the trade conflict. The growth prospects for the domestic economy continue to give little cause for optimism, particularly against the backdrop of the global slowdown. We therefore expect a further easing of monetary policy in November. Both currencies, the Australian dollar and the New Zealand dollar, are likely to remain the most prominent victims (G10 FX) of the global trend towards a looser monetary policy in the coming months.

STAY TUNED...