SMATS FX Weekly Market Report | Monday 15 February 2020

USD

The Dollar struggles once again despite a late rally on Friday. Data out of the US was less than impressive with concerns surrounding the employment situation and maintenance of low interest rates. Biden’s stimulus bill is expected to remain a hot topic this week but in terms of hard-hitting data reports, the Greenback will be driven by January’s retail sales, which is expected to rise by 0.9%. Wednesday will see the FOMC minutes which will give some hints as to how the Federal Reserve will approach the resurgence of the American economy. PMI numbers are also due out on Friday and the expectations are that the manufacturing, services, and composite PMIs for February will fall.

Influences on HKD, SGD & AED

It is set to be a relatively quiet week for our exotic currencies this week, our biggest data report should be Hong Kong’s unemployment data, which is due on out on Thursday, experts have predicted it should fall to 6.5% from 6.6%. Non-oil exports are due out for Singapore on Wednesday while their balance of trade should be released during Tuesday’s Asian session, it should fall from SG$6.2 B to SG$5.1 B.

AUD

Once again, it is the Australian Dollar taking top spot for last week, positive risk sentiment and positive updates from economic reports seemed to have contributed to the Aussies gains last week. The Aussie could be under some pressure as Victoria implement a circuit-break lockdown, traders should keep an ear out for speculations of an extended lockdown as it could trigger an AUD sell-off. It is set to be a busy week for the AUD with the Reserve Bank of Australia set to release their meeting minutes on Tuesday, we expect the minutes to give some insight on the key factors central bankers are looking at to warrant any policy changes. Thursday will see the release of Australia’s January employment data, it is expected that 30 000 jobs were added to the economy resulting in the unemployment rate sliding from 6.8% to 6.6%, the lowest since April 2020. Australia’s biggest trading partner, China, have bank holidays in the first half of the week which could put a lid on the Aussies volatility.

NZD

The Kiwi Dollar retreated last week despite rising risk sentiment and better-than-expected NZ data. Trade issues with China could have taken a toll on the Kiwi Dollar as China suspend seafood imports from New Zealand. A lack of market movers from New Zealand means that it could be down to counter-currency flows to move the comdoll. Their quarterly PPI is out on Thursday, but it is expected to only make intraday movements. NZD traders should keep an eye out for PMI releases from major economies which should drive overall risk-taking throughout the week.

EUR

It was a mixed week for the Euro in what was a quiet week from the Euro area. European Central Bank head honcho Lagarde sees significant economic risk from a resurgent in the virus. We have some big data reports out of Europe this week, starting off with the German ZEW economic sentiment, analysts predict a dip from 61.8 to 60 while the Eurozone’s figure should improve from 58.3 to 59.2. ECB meeting minute are due out on Thursday, dovish remarks could drag the Euro down upon its release. PMI readings for France and Germany are expected out on Friday, French services should fall from 47.3 to 47.0 while the manufacturing figure should climb from 51.6 to 51.7. German manufacturing is expected to fall from 54.8 to 54.6 while the services figure has been forecast to dip to 46.5.

GBP

Sterling was able to make a late rally on Friday on the back of optimism that the UK is on track to reopen their economy. The British Pound took significant gains on Friday after the gross domestic product grew by 1% from October to December, likely due to government spending and a boom in construction. UK inflation data is due out on Wednesday, headline CPI for Jan is expected to fall from 0.6% to 0.5% while the core CPI is forecast to decline to 1.2% YoY from last year’s 1.4%. Experts say that retail sales for January will tumble by 2.6% in January. Flash PMI reports are likely to have a significant impact on the GBP pairs as the manufacturing index is set to show a slower pace of industry expansion with forecasts that it will fall from 54.1 to 53.1. The services index is likely to improve from 39.5 to 42.3, showing a slower pace of contraction.