SMATS FX weekly market report | Tuesday 21 January 2020

USD

The Dollar rose last week following the signing of the first phase of the trade deal with China. This week, the Greenback will be relying on a bunch of lower-tier releases and their PMI numbers to continue the upward momentum. A 5-month high is expected for the services PMI with forecasts showing a rise of .6 to read 52.2, the manufacturing PMI is likely to come in at 52.5. The US housing data is also due out this week; the housing price index is set to rise to 0.3% in November while the existing home sales should climb to 5.42M.

Influences on HKD, AED and SGD

It is likely to be an active week for the Hong Kong Dollar with the release of their unemployment rate and inflation rate this week, the unemployment rate clocked in at 3.3% on Monday and we expect the inflation to drop from 3.0% to 2.7%. Singapore will also be releasing their inflation rate later this week, expectations are that it will drop to 0.5% from 0.6% while the core figure has been forecast to climb to 0.7% from 0.6%

AUD

We can expect to see some volatility out of the Australian Dollar this week following last week’s consolidation. Monday sees the People’s Bank of China make their rate decision, analysts expect to see the loan prime rate drop but so that the central bank can pump funds into the economy. Locally, the Australian jobs data is set to be released on Thursday, the unemployment is expected to drop to 3.8% from 3.9% while we expect an additional 11 000 jobs were added in December. Flash PMI numbers are out on Wednesday, we expect the manufacturing figure to drop to 49.0 from 49.2 while the services figure is expected to slide to 49.5 from 49.8

NZD

The New Zealand Dollar had a mixed week last week, this week this the quarterly CPI report will take top spot, in Q3 of last year, prices went up by 0.7%, for Q4 we expect to see the quarterly prices increase by 0.4%. In the absence of expected updates in the US-China trade negotiations, the NZD will be taking cues from major worldwide events like the top tier reports out of the Eurozone and UK.

EUR

This week we have a fresh batch of PMI readings out of the Eurozone this week along with the European Central Bank’s policy decision. The ZEW economic sentiment index, which is an economic performance based survey, the German figure is expected to climb to 15.2 for January while the figure for the Eurozone as a whole is likely to rise 16.3. The main driver for the Euro is likely to be the ECB decision; we don’t expect any changes to the interest rates or the LTRO purchases. The PMI numbers are likely to climb across the board, the Eurozone flash services PMI has been forecast to rise to 52.9 while the manufacturing figure is likely to rise to 46.9 from 46.3.

GBP

UK jobs data is set to be the headline report out of the UK this week with the flash PMI numbers due at the end of the week. First up is the employment data that is due out during the London trading session on Wednesday. The unemployment figure is expected to remain at 3.8% while we expect the claimant count to show an increase of 33 400, any weaker than expected results can put increased pressure on the already struggling British Pound. The flash PMI numbers for January are due out of Friday, both the manufacturing and services PMI has been forecast to rise.