Forex Weekly

Forex Weekly


Each week, we publish our Forex insights. Check regularly this space for up-to-date information. You can also contact us and enroll to receive our publication each week directly in your inbox by writing to

Pier-Luigi Bonelli Foreign Exchange Advisor
José-Manuel Luna Foreign Exchange Advisor
Ugo Biancaniello Foreign Exchange Advisor



Chair Yellen's prepared testimony was released, as widely anticipated; there was little new information in the prepared remarks (key remarks are here). She did highlight inflation in her remarks but avoided adding further details of the timing of the balance sheet runoff.  

In Canada, recent comments by the BoC indicate its willingness to normalize interest rates. They brought action to their words by hiking today its key interest rate by 0.25% to 0.75%.and will follow a cautious, data-dependent path. The next move would come in Q1 2018 and the BoC would deliver an additional hike in Q3 2018.

Euro area industrial production rose by 1.3% m/m in May, coming in slightly above consensus forecasts. The growth was broad-based and strongest in capital goods, which rebounded strongly at 2.3% m/m. These data provide some upside potential to an already strong growth outlook. This supports optimistic outlook on euro area growth.

UK labor market continued to tighten in the three months to May: 1/ the unemployment rate fell to 4.5%, lowest since 1975, 2/ employment growth was the strongest since December 2015 (+175k), 3/ regular pay growth edged up to 2% compared to 1.8% last month. In contrast, however, pay growth incl. bonuses slowed further to 1.8% (from 2.1%). The GBP remains fragile and was trading at 1.2880 ag USD post yesterday Dovish Broadbent comments.

In China, June money supply data continued to diverge between lending to the real economy and for the financial system. New lending by banks came in at RMB1540bn in the month, stronger than market expectations, taking the annual growth rate to 12.9%, suggesting that credit extended to the real economy had remained strong. The breakdown shows that medium and long term lending to households and corporates remained robust. In addition, broad money supply growth decelerated to 9.4% in the month on the back of financial de-leveraging policies. In all, lending policies are expected to remain supportive for the nascent economic recovery and the PBoC will continue to actively manage interbank liquidity