SMATS FX Weekly Market Report | Monday 22 Feb 2021

USD

A valiant effort from Dollar bulls were unable to force the Greenback into the green last week as improving economic data and vaccine hopes buoyed riskier assets as investors move away from safe havens. Powell will be hosting some speeches this week which should give some optimism to the market by downplaying the odds of tighter policies in the future. Then we have the 2^nd GDP reading on Wednesday, Q4 should see growth of 4.1% which would be higher than the initial reading of 4.0%.

Influences on HKD, SGD & AED

Singapore’s inflation numbers are due out on Tuesday, we expect them to hit the expectations of a 0.2% rise MoM for January. Then on Friday, Singapore will be releasing their bank lending for January, which should check in at a whooping SG$675 B. The HKD is in for a busy week as their GDP growth rate for the final quarter of last year is expected to rise by 0.2% QoQ and fall by 3% YoY. Then on Thursday, import and exports numbers are due out along with the balance of trade for January which should check in at HK$ -35 B.

AUD

The Australian Dollar continues its domination as it finishes in the green with positive economic updates and a better-than-expected jobs report caused the AUD to put some space between itself and the other majors. Australia will be trading on the back of a few mid-tier releases this week, construction figures and wage price index are due out on Wednesday while the private capital expenditure is due out on Thursday. Traders should know that iron ore, Australia’s main export, flew last week, leaving it vulnerable to a bounce-back at some stage this week.

NZD

A largely uneventful week for the Kiwi Dollar last week as risk-sentiment drove it higher along with a weaker US Dollar. The Reserve Bank of New Zealand will be on Wednesday the 24^th, additional stimulus and optimism over the economy boosted the NZD last time out, this week we expect much of the same with Governor Orr and his team likely to express optimism. Retail sales are due out for the 4^th quarter and analysts expect a drop by 2.5% which is likely due to lockdown restrictions.

EUR

Risk sentiment drove the markets last week as the Euro took hits from movement away from safe-havens and lower yielding currencies. In the absence of major reports, the Euro will be driven by pandemic-related updates and the few middle tier reports out of Germany. Germany, who just announced that the lockdown will be extended until 14 March will be releasing their business climate index on Monday, an increase from 90.1 to 90.5 is expected. Then on Thursday, the GFK consumer climate should rise from -15.6 to -14.0.

GBP

The British Pound takes top spot last week as it continues its drive towards her immunity and positive comments from the Bank of England regarding negative interest rate speculation caused the Pound to fly last week. Employment data is due out on Tuesday, claimant count is expected to show an increase of 35 000 in joblessness for January. Boris Johnson will be giving the roadmap to recovery on Monday, which is expected to move the markets and give an outline as to when we should see an easing of movement restrictions.