Monthly Forecast: October 2018

Foreign Exchange - Monthly Forecast
October 2018
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Andrew Kositkun
Andrew Kositkun
Foreign Exchange Analyst
The DXY (USD index) is relatively unchanged since last month. However, risks remain as the trade conflict between the US and China has escalated while other trade disputes remain unsolved. Read more...
From mid-August, when the euro crashed down, driven by many factors including concerns over European bank exposure to turn Turkey, to late September, the euro has staged a recovery. Read more...
September was a good month for the GBP, on a price perspective, as it moved up significantly, hitting a 2.5 month high. However this strength in the GBP was accompanied by an uptick in volatility as UK politicians returned from recess and Brexit talks enter the final months with many contentious issues unresolved. Read more...
Since the publication of last month's currency outlook, the JPY has been the worst performing G10 currency. Looking ahead, the JPY is likely remain stuck in a tug of war. Trade war concerns and uncertainty should continue to add safe haven flows and strengthen the JPY. Read more...
In recent commentaries, we cited NAFTA negotiations as a key driver for the CAD. This was confirmed as the CAD strengthened sharply after the United States-Mexico-Canada Agreement (USMCA) was announced. Read more...
YTD, the AUD has remained on a downward trend, driven by divergence between the RBA and Fed, as well as slowing Chinese growth and trade concerns. Short AUD remain at elevated levels and has been used by the markets as a hedge for trade war fears. Read more...
After a period of sharp depreciating pressure on the CNY, the currency has stabilized a bit. The reintroduction of the counter cyclical adjustment (CCA) factor may be the most significant sentiment stabilization step. The CCA factor is designed to offset the influence of higher (CNY weaker) spot closes on the next day's fix. This factor had been in use before being deemphasized in January of this year. Read more...
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This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. The Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
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