FOREX CURRENCY FORECAST (2015 - 2016)

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FOREX CURRENCY FORECAST (2015 - 2016)
FOREX MAJORS (USD)
2015
2016
SPOT
Q1a
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
Canadian Dollar
USD/CAD
1.27
1.27
1.30
1.30
1.29
1.26
1.25
1.24
1.24
Euro
EUR/USD
1.07
1.07
1.07
1.08
1.09
1.12
1.14
1.16
1.18
British Pound
GBP/USD
1.48
1.48
1.45
1.50
1.55
1.55
1.56
1.57
1.58
Japanese Yen
USD/JPY
120
120
121
124
123
122
122
120
120
Swiss Franc
USD/CHF
0.97
0.97
0.95
0.97
0.98
0.98
0.99
0.98
0.97
Australian Dollar
AUD/USD
0.76
0.76
0.76
0.74
0.76
0.79
0.81
0.83
0.85
New Zealand Dollar
NZD/USD
0.75
0.75
0.71
0.73
0.72
0.73
0.72
0.72
0.72
OTHER PAIRS (USD)
2015
2016
SPOT
Q1f
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
Chinese Renminbi
CNY/USD
6.20
6.20
6.26
6.25
6.22
6.19
6.17
6.13
6.11
Indian Rupee
INR/USD
62.5
62.5
61.3
61.0
61.0
60.8
60.8
60.5
60.5
South African Rand
ZAR/USD
12.5
12.5
12.3
12.3
12.1
12.0
11.9
11.8
11.7
Polish Zloty
PLN/USD
3.80
3.80
4.15
4.13
4.05
4.05
4.03
4.00
3.95
Kenya Shilling
KES/USD
94
94
95
96
95
97
92
90
88
CANADIAN CROSSES
2015
2016
SPOT
Q1f
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
Euro
EUR/CAD
1.36
1.36
1.39
1.40
1.41
1.41
1.43
1.44
1.46
British Pound
GBP/CAD
1.88
1.88
1.89
1.95
2.00
1.95
1.95
1.95
1.96
Japanese Yen
CAD/JPY
95
95
93
95
95
97
98
97
97
Swiss Franc
CAD/CHF
0.76
0.76
0.73
0.75
0.76
0.78
0.79
0.79
0.78
Austalian Dollar
AUD/CAD
0.96
0.96
0.99
0.96
0.98
1.00
1.01
1.03
1.05
New Zealand Dollar
NZD/CAD
0.95
0.95
0.92
0.95
0.93
0.92
0.90
0.89
0.89
Chinese Renminbi
CNY/CAD
4.85
4.85
4.82
4.81
4.82
4.91
4.94
4.94
4.93
Indian Rupee
INR/CAD
49.5
49.5
47.2
46.9
47.4
48.3
48.6
48.8
48.8
South African Rand
ZAR/CAD
9.56
9.56
9.46
9.46
9.38
9.52
9.52
9.52
9.44
Polish Zloty
PLN/CAD
2.99
2.99
3.20
3.20
3.15
3.20
3.22
3.23
3.19
Kenya Shilling
KES/CAD
75
75
73
74
74
77
74
73
71
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2750 14th Avenue, Suite 306 Markham
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Email: [email protected]
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Fax: 1.866.206.1740
MTFX
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APRIL 2015 - CURRENCY HIGHLIGHTS
USD
After 12 months of consecutive +200K job prints, March was a disappointment with a
non-farms payroll job print of only +126K, enough to take the wind out of the remarkable USD bull run. The greenback’s ascent has been interrupted with softer than expected economic data and further reinforced with the notion of a Fed hike still months away.
However, we expect the U.S economy to bounce back in the coming months and call for
a Fed hike in September. Our bullish view of the USD continues to remain intact.
CAD
Sentiment continues to suggest that the CAD will weaken even further as we move
through 2015. The aftershock of oil’s collapse has not completely cleared and we expect
data in the coming months to accentuate the negative impact of low oil on the Canadian
economy. Growth and interest rate differentials will weigh on the CAD and though the
pace of weakness is likely to slow, we continue to expect fresh lows in the coming
months. We look for a decisive move toward the 1.30.
EUR
The euro continues to remain under pressure with further weakness a strong possibility.
There has been a positive shift in Eurozone fundamentals and recent data releases have
come in better than expected benefiting from ECB stimulus and low oil prices. Monetary
policy divergence will likely weigh on the EUR in the medium term as the Fed begins to
raise interest rates. However, we see the euro stabilize toward the latter part of the year
and call for a year-end target of 1.09.
GBP
The pound continues to underperform against the USD and is likely to continue declining in the near term. Disinflationary pressures that have creeped into the economy,
political uncertainty with the fast approaching May 7th elections and a preference for the
USD have all contributed to consensus that the Bank of England will push out rate hikes
well into 2016. We expect the pound to weaken in the near term but stabilize toward the
latter part of 2015. We hold a year-end target of 1.55.
1.800.832.5104
[email protected]
2750 14th Avenue, Suite 306 Markham
Ontario, Canada, L3R 0B6
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Email: [email protected]
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
APRIL 2015 - US DOLLAR HIGHLIGHTS
April 2015
2015f
Spot
USD/CAD
MTFX
EUR/USD
Consensus Forecast
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
1.27
1.30
1.30
1.29
1.26
1.25
1.24
1.24
1.30
1.31
1.33
1.33
1.32
1.31
1.30
1.07
1.08
1.09
1.12
1.14
1.16
1.18
1.06
1.05
1.05
1.06
1.05
1.04
1.03
1.45
1.50
1.55
1.55
1.56
1.57
1.58
1.45
1.50
1.51
1.51
1.51
1.52
1.52
1.07
MTFX
1.07
Consensus Forecast
GBP/USD
Q1a
1.27
Consensus Forecast
1.48
MTFX
1.48
2016f
U.S. DOLLAR COMMENT:
After 12 months of consecutive +200K job gains, March
was a disappointment with US non-farm payrolls coming in
at very weak +126K. The US dollar index took a breather in
March and interrupted a remarkable USD bull run. Softer
than expected economic data was further reinforced by a
Fed that suggested that rate hikes would now be pushed
to September.
The US economy slowed in Q1 2015 weighed down by
lower capital related expenditures and a strong US dollar.
Activity however is expected to bounce back in the second
quarter fuelled by consumer confidence and spending
(benefitting from low oil prices), rising household
net-worth and improving labour market conditions
regardless of the disappointing March employment print.
Overall, broader unemployment measures have improved
with the unemployment rate near a seven year low of 5.5%
and earnings showing a meaningful 0.3% increase in
March.
Q1 2015 CURRENCY RETURNS
0%
CAD
EUR
GBP
-2%
-4%
-6%
-8%
-10%
-12%
EVENTS TO WATCH APRIL 2015
US Q1 GDP is forecasted to grow just below 2% while core
inflation continues to hover around 1.7%. The near term
underpinnings for USD strength remain in place and are
likely to continue. Overall, macro-economic data suggests
that the US economy will continue to expand and GDP
should average 2.5 percent through 2015.
ECONOMIC EVENT
DATE
USD FOMC Minutes
APR 08
USD Producer Price Inflation
APR 14
USD Retail Sales
APR 14
From a monetary perspective we see the Fed on a path to
hike interest rates in Q3. The March FOMC statement and
Yellen’s comments thereafter suggest that the Fed has
downgraded the pace of economic growth and has
implied that it intends to be cautious in the normalization
of rates. We expect the Fed to raise interest rates before
the end of the year which should maintain a bid tone on
the US dollar.
USD Building Permits
APR 16
USD Consumer Price Inflation
APR 17
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[email protected]
2750 14th Avenue, Suite 306 Markham
Ontario, Canada, L3R 0B6
MTFX
Section
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6
Email: [email protected]
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
USD/CAD APRIL 2015 HIGHLIGHTS
April 2015
USD/CAD
2015f
Spot
MTFX Forecast
Consensus Forecast
2016f
Q1a
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
1.27
1.30
1.30
1.29
1.26
1.25
1.24
1.24
1.30
1.31
1.33
1.33
1.32
1.31
1.30
1.27
USD/CAD CURRENCY TREND - MARCH 2015
HIGHLIGHTS:
At the end of the first quarter the CAD
has weakened 8% against the USD as a
result of three major themes: a collapse
in oil, BoC monetary policy and broad
based USD strength. We continue to
see the CAD weaken further though
not at an accelerated pace.
1.28
1.27
1.26
1.25
The trajectory of the CAD has been
closely tied to oil prices. North American inventories continue to remain
bloated and a new Iran deal that is
likely to add more oil in an already
oversupplied market will weigh on the
price of oil and the CAD in the near
term.
1.24
1.23
EVENTS TO WATCH APRIL 2015
ECONOMIC EVENT
DATE
CAD Ivey PMI
APR 06
CAD Employment Change
APR 10
CAD Interest Rate Decision
APR 15
CAD Core Consumer Price Inflation
APR 17
CAD Retail Sales
APR 17
The economic backdrop in Canada
remains soft with GDP likely to advance
less than 2% in 2015 while inflationary
pressures are forecast to remain low.
Taken together the BoC will lag the Fed
on interest rate hikes and accordingly
weigh on the CAD. We call for a test
of 1.30 in the coming months.
MARKET SENTIMENT:
Bearish
Bullish
1.800.832.5104
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2750 14th Avenue, Suite 306 Markham
Ontario, Canada, L3R 0B6
MTFX
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6
Email: [email protected]
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
EUR/USD APRIL 2015 HIGHLIGHTS
April 2015
EUR/USD
2015f
Spot
MTFX Forecast
Consensus Forecast
2016f
Q1a
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
1.07
1.07
1.08
1.09
1.12
1.14
1.16
1.18
1.06
1.05
1.05
1.06
1.05
1.04
1.03
1.07
HIGHLIGHTS:
EUR/USD CURRENCY TREND - MARCH 2015
The euro has dropped 11% in Q1 and is
vulnerable to further downside risk in
the near term. Aggressive QE policies
implemented by the ECB and negative
interest rates have resulted in significant outflows from Europe weighing
heavily on the euro.
1.12
1.11
1.1
1.09
1.08
The scope for further EUR/USD downside does exist and should play out in
the markets over the coming months.
However, once the Fed tightening is
fully priced in, markets should begin
focusing on Eurozone fundamentals
which should be supportive of the euro
in the medium/long term.
1.07
1.06
1.05
1.04
1.03
EVENTS TO WATCH APRIL 2015
ECONOMIC EVENT
DATE
EUR Interest Rate Decision
APR 15
EUR Consumer Price Inflation
APR 17
EUR German Economic Sentiment
APR 21
EUR German Manufacturing PMI
APR 23
USD German Business Climate
APR 24
Eurozone fundamentals have shifted to
the upside with most forecasts calling
for a GDP growth of 1.5% this year.
Though diverging monetary policy will
weigh on the euro we see a stabilization toward the latter part of the year.
Calls for a 1:1 euro-dollar (parity) seem
unlikely. We hold a year-end
EUR/USD forecast of 1.09
MARKET SENTIMENT:
Bearish
Bullish
1.800.832.5104
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2750 14th Avenue, Suite 306 Markham
Ontario, Canada, L3R 0B6
MTFX
Section
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6
Email: [email protected]
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
GBP/USD APRIL 2015 HIGHLIGHTS
April 2015
GBP/USD
2015f
Spot
MTFX Forecast
Consensus Forecast
2016f
Q1a
Q2f
Q3f
Q4f
Q1f
Q2f
Q3f
Q4f
1.48
1.45
1.50
1.55
1.55
1.56
1.57
1.58
1.45
1.50
1.51
1.51
1.51
1.52
1.52
1.48
HIGHLIGHTS:
GBP/USD CURRENCY TREND - MARCH 2015
Political uncertainly is likely to weigh on
the GBP leading into the May 7th
election. The Bank of England faces low
inflationary pressures and as a result is
unlikely to enter into a rate hiking cycle
until 2016. The overall sentiment on
the GBP remains bearish over the short
term.
1.56
1.55
1.54
1.53
1.52
Though recent fundamentals have
been weak, UK growth should accelerate over the course of 2015. Lower
inflation, solid employment gains and
growing consumer consumption
should provide a potent mix to drive
growth higher. The UK is expected to
post a 2.7% rise in GDP in 2015, well
ahead of most of its peers.
1.51
1.5
EVENTS TO WATCH APRIL 2015
ECONOMIC EVENT
DATE
GBP Interest Rate Decision
APR 09
GBP Manufacturing Production
APR 10
GBP Consumer Price Inflation
APR 14
GBP Employment Data
APR 17
GBP Retail Sales
APR 23
We expect politics to weigh on the GBP
in the coming months; however, given
the strong economic fundamentals the
UK should outperform most of its peers
and give a significant boost to the
pound toward the latter part of 2015.
We look for a GBP/USD year-end
target of 1.55.
MARKET SENTIMENT:
Bearish
Bullish
1.800.832.5104
[email protected]
2750 14th Avenue, Suite 306 Markham
Ontario, Canada, L3R 0B6
Email: [email protected]
Toll Free: 1.800.832.5104
Fax: 1.866.206.1740
MTFX
Section
Analytics
6
FOREIGN EXCHANGE DISCLAIMER
This publication has been prepared by MTFX Inc. for informational and marketing purposes only. Opinions, estimates and
projections contained herein are our own as of the date hereof and are subject to change without notice. The information and
opinions contained herein have been compiled or arrived at from sources believed reliable, but no representation or warranty,
express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as
a representation for which MTFX Inc., its affiliates or any of their employees incur any responsibility. Neither MTFX Inc. nor its
affiliates accept any liability whatsoever for any loss arising from any use of this information.
MTFX Analytics
2750 14th Avenue, Suite 306
Markham, Ontario Canada L3T 6X1
Toll Free: 1.800.832.5104
Fax: 1.866.832.5104
Email: [email protected]
This report has been prepared by MTFX Inc. as a resource for its clients. The
opinions, projections and estimates contained herein are our own and subject to
change without notice.
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