There have been several key developments in the forex markets so far this month, some which have seen currencies buck their trend.
Perhaps the most interesting has been the performance of the US dollar. I have been an advocate of a stronger dollar and while that view finally materialised in August, the move has been very short lived. The US Dollar Index has closed three weeks lower out of a possible four this month - a period that has seen the Index drop from 95.40 levels to the current 93.60 handle.
Fundamentally, we have seen a lot of hot money flowing back into risk as the US-Sino trade war story starts to peter out. We had Donald Trump announce another round of tariffs on $200 billion worth of Chinese goods, however, the aggressiveness towards the proposed hikes – with 10 per cent set to kick in from next month and another 25 per cent next year – has seen markets shrug off the news as market participants adopt a risk -n approach.
The move lower has by no means changed my views on the dollar trend; I see this dip as an opportunity for buyers to come in before we see a move higher back towards 96 next month. The logic is simple: US-backed assets offer the highest level of safety and security while also offering a higher rate of return due to higher US interest rates. It’s a combination that gives me confidence that as long as the US central bank is at the forefront of rate hikes, we should see an in-demand dollar.
The US data docket continues to impress – buoyed by the holy trinity of upward inflation, improving output and a strengthening labour force. These metrics all but guarantee the Fed to deliver its third rate hike this year on Wednesday. While this move is pretty much priced in – watch for how the voting changes within the Federal Open Market Committee with regards to future rate hikes.
In June’s meeting, eight members foresaw up to four hikes this year (up from seven members in March) and if we see additional members upgrading their projections this could respark the dollar rally through the start of October.
It remains difficult to predict the outcome of such votes; while the stellar US data docket hints at a hawkish FOMC, the lingering trade wars story - coupled with political uncertainty - could taper Fed expectations. As a result, it would prove prudent to await the outcome of the projections before building any near-term dollar-related strategies.
Regardless of the outcome of the Wednesday meeting - technically there will be buying support coming into the Index between 92.80 and 93.20 levels in the weeks ahead.
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Read more:
Currencies under the spotlight amid trade woes
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I am also keeping an eye on Thursday’s US GDP print. We have seen robust gains in this number of late, however I don’t expect a reading above 4.2 per cent. Any release below this would see immediate weakness in the dollar in the short term. Payrolls due out next week will generate similar movement.
The other surprising story this month has been the positive turnaround for the euro. The Dubai Gold & Commodities Exchange (DGCX) EUR/USD contract has popped to more than three-month highs. There has been a fresh round of buying in the common currency on the back of improving fundamentals; while the European Central Bank has committed to no rate changes through next year, they did announce a 50 per cent taper on the current bond-buying programme from next month and this has started the optimism.
Earlier this week, ECB President Mario Draghi continued the hawkish rhetoric when he noted that euro-area inflation is “expected to increase further over the coming months” on the back of wage growth. This saw the EUR/USD take out a very strong resistance level and trade above 1.18 levels. Fundamentally, we do not expect to see many fireworks in the European calendar – but keep an eye out for a reading of business climate and euro-area consumer confidence due out on Thursday to truly gauge the optimism. Mr Draghi will be speaking again and this could see another bout of fresh Euro buying.
Technically, the move could be a cause of concern for euro shorts as the currency is looking strong after taking out both the 50 week and 50-month moving average, and crushing through the 200-daily exponential moving average. A weekly and monthly chart would show a clear head and shoulders pattern forming which would suggest a break down back towards 1.11 levels. However, judging by the recent pricing action, expect to see a move upwards towards 1.19 levels where I expect this recent euro rally to fade between 1.19 and 1.2070 levels.
British pound bulls were stopped short in their tracks as the British pound fell back towards 1.31 levels on the DGCX. The uncertainty and fragility of Theresa May’s position amidst the recent Brexit negotiations have shaken the pound. Bank of England governor Mark Carney is set to speak on Thursday, which will see volatility in pound-linked asset classes, and this is followed by the UK GDP reading due out later this week (expected at 0.4 per cent quarter on quarter). Expect upsides in the GBP/USD to be capped at 1.33 levels with initial support coming in at 1.30 levels before 1.27 levels get exposed.
And finally, while opportunities seem to lack inspiration in gold – expect strong support at 1194 levels while upsides are capped at 1220 levels. Meanwhile, the Indian rupee continues to trade near lifetime lows against the dollar. Expect that figure of 73 (equivalent to 136 on DGCX’s INR/USD contract) to hold as a strong psychological support in the short term. This would represent a nice level to potentially build long positions on a short-term view.
Gaurav Kashyap is a market strategist at Equiti Global Markets
The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti
A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
Results
2pm: Handicap Dh 90,000 1,800m; Winner: Majestic Thunder, Tadhg O’Shea (jockey), Satish Seemar (trainer).
2.30pm: Handicap Dh120,000 1,950m; Winner: Just A Penny, Sam Hitchcott, Doug Watson.
3pm: Handicap Dh105,000 1,600m; Winner: Native Appeal, Pat Dobbs, Doug Watson.
3.30pm: Jebel Ali Classic Conditions Dh300,000 1,400m; Winner: Thegreatcollection, Adrie de Vries, Doug Watson.
4pm: Maiden Dh75,000 1,600m; Winner: Oktalgano, Xavier Ziani, Salem bin Ghadayer.
4.30pm: Conditions Dh250,000 1,400m; Winner: Madame Ellingtina, Richard Mullen, Satish Seemar.
5pm: Maiden Dh75,000 1,600m; Winner: Mystery Land, Fabrice Veron, Helal Al Alawi.
5.30pm: Handicap Dh85,000 1,000m; Winner: Shanaghai City, Jesus Rosales, Rashed Bouresly.
The 12
England
Arsenal, Chelsea, Liverpool, Manchester City, Manchester United, Tottenham Hotspur
Italy
AC Milan, Inter Milan, Juventus
Spain
Atletico Madrid, Barcelona, Real Madrid
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THE%20SPECS
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The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Sour%20Grapes
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Power: 502hp at 7,600rpm
Torque: 637Nm at 5,150rpm
Transmission: 8-speed dual-clutch auto
Price: from Dh317,671
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Plan to boost public schools
A major shake-up of government-run schools was rolled out across the country in 2017. Known as the Emirati School Model, it placed more emphasis on maths and science while also adding practical skills to the curriculum.
It was accompanied by the promise of a Dh5 billion investment, over six years, to pay for state-of-the-art infrastructure improvements.
Aspects of the school model will be extended to international private schools, the education minister has previously suggested.
Recent developments have also included the introduction of moral education - which public and private schools both must teach - along with reform of the exams system and tougher teacher licensing requirements.
The years Ramadan fell in May
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
Last-16
France 4
Griezmann (13' pen), Pavard (57'), Mbappe (64', 68')
Argentina 3
Di Maria (41'), Mercado (48'), Aguero (90 3')
MATCH INFO
Fixture: Ukraine v Portugal, Monday, 10.45pm (UAE)
TV: BeIN Sports
COMPANY%20PROFILE
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Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
BUNDESLIGA FIXTURES
Friday (UAE kick-off times)
Cologne v Hoffenheim (11.30pm)
Saturday
Hertha Berlin v RB Leipzig (6.30pm)
Schalke v Fortuna Dusseldof (6.30pm)
Mainz v Union Berlin (6.30pm)
Paderborn v Augsburg (6.30pm)
Bayern Munich v Borussia Dortmund (9.30pm)
Sunday
Borussia Monchengladbach v Werder Bremen (4.30pm)
Wolfsburg v Bayer Leverkusen (6.30pm)
SC Freiburg v Eintracht Frankfurt (9on)
How to donate
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
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Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
Dubai World Cup factbox
Most wins by a trainer: Godolphin’s Saeed bin Suroor(9)
Most wins by a jockey: Jerry Bailey(4)
Most wins by an owner: Godolphin(9)
Most wins by a horse: Godolphin’s Thunder Snow(2)
The Comeback: Elvis And The Story Of The 68 Special
Simon Goddard
Omnibus Press
Generation Start-up: Awok company profile
Started: 2013
Founder: Ulugbek Yuldashev
Sector: e-commerce
Size: 600 plus
Stage: still in talks with VCs
Principal Investors: self-financed by founder
Company%20Profile
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All%20We%20Imagine%20as%20Light
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Company profile
Company name: Suraasa
Started: 2018
Founders: Rishabh Khanna, Ankit Khanna and Sahil Makker
Based: India, UAE and the UK
Industry: EdTech
Initial investment: More than $200,000 in seed funding
The specs
Engine: 2.0-litre 4-cyl, 48V hybrid
Transmission: eight-speed automatic
Power: 325bhp
Torque: 450Nm
Price: Dh289,000
