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
The USD was one of the strongest major currencies last week, as risk off flows overtook markets. Some US citizens have already received their payment from the $1.9T stimulus package, which supported the USD as a result. Last week's economic data from the USA was a mix between positive and negative results. Durable Goods Orders came in at -1.1%, much lower than the 0.8% that was forecasted. However, GDP data was very positive, actual value was 4.3%, up from the forecasted value of 4.1% for Q4 annualized results.
In the coming week, keep an eye out on Wednesday (31/03) for the ADP Employment Change, and on Friday (02/04) watch for the ISM Manufacturing PMI and Non Farm Payroll.
One week forecast for the USD is bearish.
EUR
The EUR managed to appreciate against most major currencies in the last week. The EU has stated that they will be blocking vaccine exports until more EU citizens begin to receive the vaccine, which supported the EUR after multiple weeks of downside as there were high infection rates throughout the region. The upside seems speculatively projecting future conditions, as in the last week Germany experienced a spike in covid infection rates and deaths. Surprisingly, economic data reported from the EU was quite positive. Germany’s Markit PMI Composite result was 56.8, way above the 51.6 forecasted value. EUR Markit PMI Composite was also positive, with an actual of 52.5 and a forecast of 49.1.
In the coming week, look out for Germany’s Harmonized Index of Consumer Prices on Tuesday (30/03), the EU CPI Data on Wednesday (31/03) and Germany’s Retail Sales on Thursday (01/04).
One week forecast for the EUR is bullish.
AUD
The AUD was one of the weakest trading currencies last week, depreciating most against the JPY (-1.27% AUD/JPY week performance). The performance seemed to be affected by risk flows, as there was no high impact data for the AUD. Westpac have updated their RBA QE forecast to 100 billion, (increased by 50 billion), saying that it was unlikely that the Fed would reach their targets by October 2021. If the RBA folds, it will signal a tightening of monetary policy, and the AUD and Aussie bond markets could receive a slight boost on the forecast update.
In the coming week, both the Trade Balance and Retail Sales Data will be released on Thursday (01/04).
One week forecast for the AUD is bullish.
GBP
The GBP depreciated across the board in the last week, in line with risk off movements. Despite this being the first major downside for the GBP since the beginning of the year, the currency has already begun making a recovery. Economic data for the GBP was also a mix of positive and negative results. Performing negatively was the CPI (YoY) data as the actual was 0.4%, much lower than the anticipated 0.8% that was forecast. On the other hand, positive data included the Unemployment Rate, which dropped to 5.0% vs the forecasted rate of 5.2% and the Markit Services Composite PMI, reported at 56.8 vs the forecast of 51.1%.
In the coming week, keep an eye on the GDP Data on Wednesday (31/03).
One week forecast for the GBP is bullish.