SMATS FX Weekly Market Report | Monday 1 February 2021

USD

Non-farm payrolls are set to be this week’s major mover in the markets as it printed a surprise decline of 140 000 jobs in December when analysts predicted a rise of 50 000. This week we expect an addition of 30 000 jobs into the market while the unemployment is expected to rise from 6.7% to 6.8%. Worse than expected numbers would have an exaggerated impact on the markets following last week’s miss. Other medium-tier data will be sprinkled throughout the week but should not cause any medium-term fluctuations. Dollar demand is likely to be next in line for catalysts that should be impacting the markets with the Fed’s dovish stance.

Influences on HKD, SGD & AED

This week, Hong Kong have a few medium-tier data reports that could influence the HKD pairs, on Tuesday, the yearly retail sales for December should fall by 7%, it is not all negative though as the markit PMI for Jan is looking to improve from 43.5 to 44.0. Singapore will be releasing their PMI numbers on Tuesday and Wednesday, the former sees the SIPMM PMI fall from 50.5 to 50.0, then the markit PMI should drop from 50.5 to 50.0 a day later. Retail sales for December is expected to increase by 1.5% in December. Just the one data release for the UAE and that is the Emirates NBD PMI, it is expected to fall from 51.2 to 51.0.

AUD

Aussie Dollar traders should brace themselves for the Reserve Bank of Australia’s interest rate decision that is happening on Tuesday during the Asian trading session. We do not expect any changes to the interest rates, but we are expecting positive economic projections from the RBA and optimism regarding growth forecasts. The trade balance is expected to show a tighter surplus in December while the retail sales are expected to fall by 4.3% in November. Doubts surrounding the AstraZeneca vaccine, which is most Australia’s orders, is likely to limit AUD gains throughout the week.

NZD

It looks to be a busy week for the Kiwi Dollar this week with major data releases set to drive the currency’s strength. Quarterly job data took off last week as the unemployment rate sky-rocketed from 4% to 5.3%, analysts expect a further rise to 5.4% in Q4. Major data releases from New Zealand’s two biggest trading partners, China, and Australia, should drive the rates as the RBA is expected to refrain from tapering interest rates while Chinese PMIs are expected to decrease for December. Market risk should drive the high-yielding Kiwi Dollar as vaccine related updates should impact investor sentiment.

EUR

There is no major catalyst out of Europe this week, but we do have a batch of leading indicators that should influence the Euro’s value. Germany will be releasing their retail sales on Monday while the flash GDP for the Eurozone is expected to fall by 1.4% in the 4^th quarter while. Eurozone flash CPI is expected to increase by 0.4% while the German factory orders is expected to decline by 1.2% in December.

GBP

It is shaping up to be an exciting week for the British Pound with the Bank of England set to make their policy announcement on Thursday. No change is expected to interest rate of 0.1% or the asset purchases at £ 895 B, but any votes to cut rates should trigger a bearish reaction from Pound traders. The quarterly monetary policy report, which includes inflation and economic growth projections for the next two years, is also due out at the same time.