Smats FX weekly market report | Monday 02 March 2020

USD

The US Dollar was hurt last week as the stock markets tumbled and news that the Federal Reserve is pricing in 3 interest rate cuts in the coming months. To compound matters, the US is also starting to contend with its first signs of a Coronavirus outbreak. The US manufacturing PMI numbers are due out on Monday, the ISM figure is expected to dip from 50.9 to 50.2. The services PMI, which is due out Wednesday, is expected to drop drastically from 53.4 to 49.4. The main driver for the US Dollar this week will undoubtably be the jobs data due out on Friday, expectations are that 165 000 jobs would have been added to the US economy for February. 

Influences on HKD, SGD & AED

In a light week for our exotic currencies, the USD is likely to carry these currencies along wherever it goes. Hong Kong will be releasing their retail sales figure for January on Monday, a dip of 22% is expected. Their Markit PMI figure is expected to dip to 46.5 from 46.8 while Singapore’s is likely to dip to 51.1 from 51.4 when they are released on Wednesday. The AED could be influenced by its NBD PMI on Tuesday, it is expected to climb from 49.3 to 49.5.

AUD

The Aussie Dollar struggled last week over Coronavirus concerns, but they have a bunch of top-tier data to hopefully spark a turnaround for the comdoll. The main driver this week will be the Reserve Bank of Australia’s policy statement on Tuesday, as expected, the RBA kept rates steady at 0.75%. Analysts expect the RBA to hold rates at 0.75% after it was noted that the bushfires and coronavirus will only temporarily weigh on the growth of the Aussie economy. Next up is the quarterly GDP report due out on Wednesday, it is expected that the economy grew inline with the 0.4% forecast for the final quarter of last year. Australia’s retail sales have taken a hit in the last few months and its woes are expected to continue as January’s figures are forecast to drop by a further 0.2%. Finally, on Thursday, we can expect the Aussie trade surplus to narrow from A$5.22 B to A$4.9 B.

NZD

Much like the Aussie Dollar, the New Zealand Dollar struggled on the back of global trade concerns and the spreading of COVID-19 into several European countries. In a light week of data, the NZD will be taking its cues from the abundance of reports coming out of Australia as well as the Chinese PMI readings which will mark the first PMI report since the Coronavirus outbreak. The sole NZD report this week will be its building permits which is expected to have climbed by 9.9% following a decline of 8.4% in November.

EUR

The Euro outperformed all major currencies last week and it is expected to continue outperforming most currencies in the short-term. The single European currency has a light week in terms of reports due this week. Flash CPI readings are due out on Tuesday, the headline CPI and the core CPI are both expected to remain unchanged at 1.4% and 1.1% respectively. The Eurozone jobs data is also due out on Tuesday as we expect the unemployment rate to remain at 7.4% while retail sales for February is expected to climb by 0.8% month-on-month when it is released on Wednesday.

GBP

After a stellar week last week, the UK economy only has a handful of catalysts to impact the Pound’s strength this week. Final PMI readings are due out throughout the week, Monday sees the releasing of the manufacturing PMI, no revisions are expected as analysts forecast the headline figure to come in at 51.9 from 50.0. On Wednesday, the services PMI is expected to drop from 53.9 to 53.3. Probably the biggest driver for the GBP this week will be the Bank of England’s monetary policy report, Mark Carney and some of his MPC members will be commenting on inflation and the outlook of the UK economy. Any comments surrounding Brexit and the coronavirus issues could cause volatility for Pound pairs.