Weekly Forex Analysis> 14 Nov.

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Sterling slipped over 1% on Monday against the dollar, which followed U.S. bond yields sharply higher on expectations of a jump in inflation following Donald Trump’s U.S. presidential election victory. The pound has just recorded its best fortnightly performance on a trade-weighted basis in eight years, with investors’ focus having turned away from Brexit and towards political risks elsewhere. A slew of perceived risk events in Europe are weighing on the euro, with Trump’s victory seen boosting a global wave of populism and radical political parties. Italy has a referendum on constitutional reform next month, while French, Dutch and German national elections are all due next year. Sterling fell to as low as $1.2445 on Monday, down 1.2% on the day, but still around 2.5% up from two weeks ago. It is set to close down -0.83% at 1.2493 and up 0.35% 0.8591.

The Canadian dollar weakened to a fresh eight-month against its firmer U.S. counterpart on Monday, and Canada’s bond yields surged as investors bet that U.S. President-elect Donald Trump will pursue policies that trigger higher inflation.  The Canadian dollar was trading at C$1.3549 to the greenback, or 73.81 U.S. cents, slightly weaker than Friday’s close of C$1.3545, or 73.83 U.S. cents, according to Reuter’s data. The currency’s strongest level of the session was C$1.3495, while it touched it’s the weakest since Feb. 25 at C$1.3589. Its official close on Thursday, ahead of Friday’s Remembrance Day holiday, was C$1.3483, or 74.17 U.S. cents.

The New Zealand dollar slipped overnight, to a one-month low, after an earthquake rocked the country early Monday. South Korea’s won dropped to its weakest level since June amid growing calls for President Park Geun-hye to be impeached over an influence-peddling scandal, while China’s Yuan slid to a six-year low. The KRW slipped another 0.35% at 1,168.70.

The Australian dollar slipped to near one-month lows on Monday, falling for a fourth straight session, as soaring U.S Treasury yields led broader greenback strength. The Australian dollar slipped as far as $0.7518, its lowest since Oct.13. It was last unchanged at $0.7546. The Aussie has lost about 1.5% of its value since Donald Trump won the U.S. presidential election last week, on speculation his policies could reignite inflation and with it drive up interest rates.

China’s Yuan slipped on Monday after the central bank dropped the trading midpoint to its weakest rate since Sept. 2009 following the dollar’s best week in a year. The PBoC set the midpoint rate at 6.8291 per dollar prior to market open, about 0.26% weaker than the previous fix of 6.8115. To a large extent, the Yuan has mirrored the dollar in recent weeks as the greenback has gained strength and surged after the U.S. presidential election. The global dollar index rose above 100 from the previous close of 99.06. Offshore one-year non-deliverable forwards contracts, considered the best available proxy for forward-looking market expectations of the Yuan’s value, traded at 7.019, 2.71% weaker than the midpoint.

The Brazilian real weakened more than its peers on Monday as traders’ concerns over the election of Donald Trump as U.S. president drove investors to seek safer investments ahead of a local holiday. Other Latin American currencies were mixed after Trump softened his campaign pledges. Worries that heavy public spending could lead the U.S. Federal Reserve to raise rates by more than expected triggered an emerging market selloff last week. The Brazilian real weakened 1.3% to 3.43 reais, extending losses to 7.6% in four trading days.

The Mexican peso, widely seen as most vulnerable to Trump’s campaign promises, strengthened 0.4% after gaining over 1% the day before. The peso traded as cheap as over 21 against the greenback earlier in the session. The peso has been the world’s worst-performing currency this year on fears Trump could decrease trade and build a wall between the Mexico and the United States, while also deporting about 11 million people living illegally in the United States.

South Africa’s rand weakened on Monday, extending losses from the previous week as currency and bond markets in the United States rallied on growing bets that Donald Trump will ramp up spending to boost growth in the world’s largest economy.  The rand had slipped 0.56% to 14.4100 per dollar, its weakest since Oct. 12, bringing total losses to more than 9% since Trump’s unexpected victory in U.S presidential elections held on Nov. 8 2016.

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