Smats FX weekly market report | Monday 27 January 2020

USD

The Federal Reserve will be making their interest rate decision on Wednesday, no changes are expected to the rate, but we hope to get some clues as to what the Fed have in mind for 2020. Tuesday sees the release of the US durable goods orders for December, we expect a rebound to 0.6% after falling by 2% in November. On Thursday, we expect the advance GDP report to show an annualized 2.1% for the 4^th quarter of last year. Core PCE price index rounds the week up on Friday when we expect to see the 0.1% growth maintained for December.

Influences on HKD, SGD & AED

Singapore will be releasing their PPI for December along with their imports and exports on Wednesday, the PPI is expected to come in at 0.5% from the -4.9% seen in November. Then on Friday we can expect their unemployment rate to drop to 2.2% from 2.3%. The Hong Kong Dollar is struggling for strength with news coming out that the coronavirus has spread to certain parts of the already troubled nation. It will just be the release of the loan growth for the AED this week so all eyes are on the FOMC rate decision for our exotic currencies.

AUD

A busy week for the Aussie Dollar will be likely be dampened by the ongoing bushfires and the concerns regarding the coronavirus. On Wednesday, we expect the quarterly CPI to see the annualized figure remain at 1.7% for the final quarter of last year. The quarterly PPI is likely to grow by 0.3% in Q4 of last year. Market sentiment will likely be driven by the FOMC and BOE’s policy statements, so market traders should be keeping their eyes out for those statements.

NZD

The Kiwi Dollar strengthened last week amidst positive data. This week they will mostly be driven by market risk sentiment with the coronavirus in the headlines. Locally, they will be releasing their trade balance on Wednesday, imports are expected to drop to NZ$5.4 B from NZ$5.98 B while exports are likely to increase to NZ$5.3 B from NZ$5.23 B. The trade balance deficit is likely to reduce substantially from NZ$-753 M to NZ$-100.00.

EUR

A handful of medium-tier data reports are set to drive the Euro’s price this week. The German Ifo business climate index is set to show an improvement to 97.1 from 96.3 for January. The following flash PMI readings are expected to spill out during the week.

France: Services – dip from 52.4 to 52.2. Manufacturing – climb from 50.4 to 50.5.

Germany: Services – Rise to 53.2 from 52.9. Manufacturing – rise to 44.6 from 43.7

Euro zone: Services – improve to 52.9 from 52.8. Manufacturing – climb to 46.9 from 46.3.

GBP

Better-than-expected data out of the UK last week pushed the Pound higher. This week we have the Bank of England monetary policy decision, we don’t expect to see any changes from the current interest rate of 0.75% nor the asset purchases. This will be final monetary policy decision led by Governor Carney before Andrew Bailey takes his place. We will also be treated to the BOE’s monetary policy report which will show growth and inflation estimates for the next 2 years. The European Parliament is also expected to approve the Withdrawal Agreement on Wednesday and Britain will be set to leave the EU later this week.