Intro
We've covered what's happening for the major currencies in the coming weeks. Read on to see what we are looking for.
Our Outlook
USD
Up until the weak NFP data which came in below the forecast of 50K down to 49K, the USD was quite strong. Although the data was displeasing, overall, it was still a positive figure for the US as they continue to recover from the pandemic. Despite the positive data from the US in the last week, markets reacted significantly with a USD sell off to end the week. Majority of the data from the US performed quite well throughout the week, with the Markit Services PMI coming in above the forecast of 57.4 to 58.3 and the ADP Employment Change also being above the forecast of 49K to 174K. Manufacturing industries in the US are still weak as the Markit Manufacturing PMI underperformed, which is an essential indicator for the demand of national products. Also increasing is the US treasury yields, indicating further USD optimism.
Major events to watch out for in the next week include the USD CPI Data on Wednesday (10/02) and the Michigan Consumer Sentiment Index on Saturday (13/02).
One week forecast for the USD is bullish.
EUR
Major data coming from the European Union in the last week was quite strong, as CPI came in at 0.9%, GDP at -5.1% and Retail Sales at 2.0%, all performing better than forecasted figures. However, this did not stop the EUR from selling off most of the past week as markets did not react well to the data. The EUR still seems to be on the backfoot, as concerns rise that the ECB might intervene with the EUR exchange rates. In the coming month, it is going to be essential for the EUR to keep an eye on the ECB statements and the EU economic data in order to know the direction of the EUR.
It is quiet for the next week with no major economic events.
One week forecast for the EUR is bearish.
AUD
As the AUD appreciated in the last week against currencies like the JPY and CHF, it continued to experience slight strength through the week while selling against the stronger major currencies. A negative sign for the AUD was the retail sales data, which declined to -4.1% from December's reading of -4.2%. On the other hand, the Australian trade balance showed major growth, with a reading of 6.785B after the previous 5.022B, which reflects the surplus in exports over imports. This is seen as a positive sign for the AUD. As expected, interest rates were left unchanged at 0.1% by the RBA.
It is also quiet for the AUD in the coming week with no major economic events.
One week forecast for the AUD is bullish.
GBP
It was a weak performance from the GBP in the last week, however, the Brexit deal calm greatly supported the GBP to stop it from having a major fall. On a positive note, the BoE left interest rates unchanged and also ruled out any negative rates in the near term. Further data released regarding the covid-19 vaccine’s success rates from different companies saw rates from 60-93%. This will further support the UK’s vaccine rollout, which will be essential in their economic recovery and the GBP exchange rates.
Events to watch out for in the coming week is the BoE Gov. Bailey’s Speech on Thursday (11/02) and the GDP Data coming on Friday (12/02).
One week forecast for the GBP is bearish.
JPY
As risk on flows continued for the JPY, it also continued to depreciate in the last week. Although there were no high impact events throughout the last week, there was still data released from the Monetary Base and Leading Economic Index, which were both negative (low impact).
It is a quiet week for the JPY next week with no major economic events happening.
One week forecast for the JPY is bearish.
CAD
Despite the negative readings from Unemployment Rate data, 9.4% vs 8.9% forecast and Change in Employment data, -212.8K vs -47.5K forecast, the CAD still managed to appreciate in the last week. The CAD continued to appreciate on the fact that demand and price of oil is increasing, with the price currently at $59. As this is a commodity based currency, it appreciates and depreciates with increased or decreased oil demands.
It is quiet for the CAD in the next week, with no major economic events.
One week forecast for the CAD is bullish.
CHF
The CHF continued to depreciate in the last week as risk on flows drove the movement. Switzerland still holds negative rates which means that the CHF isn't an attractive asset to hold long term (bearish). Although, in the last few months, there has been positive economic data coming from Switzerland (bullish).
The rest of the month is quiet for the CHF, with only one high impact event, which is the GDP data on Thursday (25/02).
One week forecast for the CHF is bearish.