SMATS FX Weekly Market Report | Monday 25 January 2021

USD

Last week, risk sentiment forced the USD down from the get-go. Improving economic data and increased chances of more stimulus had a subdued impact on the Greenback. On Wednesday, the durable goods order for December is expected to increase by 0.8%. Later on Wednesday, the Federal Reserve will be making their interest rate decision followed by their press conference. No rate change is expected from the Federal Reserve but we should keep our ears out for any commentary from Fed members. Personal income and spending for December is due out on Friday, the former is expected to rise by 0.1% and the latter should decrease by 0.6%

Influences on HKD, SGD & AED

Singapore will be releasing a number of reports throughout this week, starting with a batch of CPI reports on Monday, it is expected that the core inflation rate will remain at -0.1%. On Tuesday, the industrial production figure for December is expected to slow down while the most import release will be the unemployment rate for the 4^th quarter of last year, it is expected to check in at 3.5%. Hong Kong will be releasing their balance of trade on Tuesday, it is expected to check in at HK$-20 B while the GDP growth rate advance for the 4^th quarter should rise by 1.1% QoQ.

AUD

The Aussie Dollar ended the week in the red after a disappointing retail sales update on Friday. Australia have a light week of data this week with just the quarterly inflation of interest, markets expect a quarterly increase of 0.8% with annualized prices climbing up by the same amount. Risk appetite should impact the risk-friendly AUD as Biden looks to increase fiscal stimulus in his first week in charge of the world’s biggest economy.

NZD

Another light week for the New Zealand Dollar this week means that risk sentiment should drive the Kiwi Dollar’s strength this week. Trade data is due out on Wednesday, after showing a trade surplus in November, exports are expected to fall by 0.2% while imports are forecast to drop by 17% for the month. Analysts see a slight decrease in the trade balance for December, forecasts show the figure fall from NZ$252 M to NZ$150 M.

EUR

Better than expected economic data from Europe despite the shaky vaccine rollout caused the Euro to gain during the week. Surprisingly, positive commentary from ECB head honcho Christine Lagarde also pushed the Euro higher last week. No major catalysts for the Euro this week doesn’t mean there won’t be any movement for the single European currency this week. German IFO business climate is expected to dip from 92.1 from 91.5 while the consumer climate should fall from -7.3 to -7.8. Spanish flash CPI should decline by 0.6% and the flash GDP should show a 1.5% contraction.

GBP

Despite a quiet week for the British Pound, it managed to gain against most major’s, likely due to counter-currency weakness, risk sentiment and better than expected inflation numbers is likely behind the short-term strength of Pound. The UK jobs report should be at the top of the list for the GBPs strength this week as the claimant count change should show an increase in joblessness of 40,000 for December while the unemployment rate is expected to rise from 4.9% to 5.1%. With last week’s flash PMI readings missing expectations last week, there are hints that weaker-than-expected results could be a theme of UK data.