SMATS FX Weekly Market Report | Monday 01 March 2021

USD

As risk sentiment soured into the second half of last week, the USD rapidly rose as it entered the weekend in the green against the majors. It is non-farm payrolls again this week for the US, the jobs data is expected to show a rise of 140 000 jobs in the market while the unemployment is expected to remain at 6.3%. The US PMI numbers are expected to climb across the board, meaning the services sector is recovering along with the manufacturing sector. Biden’s stimulus bill is on the docket again this week, as the pressure piles up with the minimum wage increase. Risk sentiment is also going to play a critical role for the USD this week with a risk-off sentiment benefitting the Dollar.

Influences on HKD, SGD & AED

This week, Singapore will be releasing their PMI figures for February, the SIPMM manufacturing figure should show an increase to 51.0 from 50.7, resembling an expansion of the manufacturing sector. On Wednesday, their markit PMI should fall from 52.9 to 52.0 and finally on Friday, their retail sales should bounce back in January by 1.2%. Hong Kong will be releasing their retail sales for January on Wednesday, it is expected to fall by 6% YoY while their markit PMI should rise from 47.8 to 48.0

AUD

The Australian Dollar lost top spot this week as risk assets fell across the markets due to rising bond yields. The most important catalyst for the AUD this week will be the interest rate decision on Tuesday, the Reserve Bank of Australia are not expected to make any changes, but they should be tipping on the rate of recovery of the Aussie economy. On Wednesday, the GDP data is due out during the Asian session, with the RBA chart pack also due out, it is expected to have a significant impact on AUD pairs. On Thursday, January’s balance of trade figures, imports, exports, and retail sales figures are due out upon release, the AUD pairs might be impacted.

NZD

The Kiwi Dollar had a bullish reaction to the adjustment of the Reserve Bank of New Zealand’s mandate, but it ended up in the red along with riskier assets due to a swing to a more risk-off sentiment. A relatively quiet week for the Kiwi Dollar means that it will be driven by risk flows and counter-currency movements. Import and export prices are due out on Tuesday, but we do not expect these to have a significant impact the rates. A frustrated NZ PM Jacinda Ardern has announced a 7-day lockdown in Auckland after rule-breakers led to a level-3 lockdown.

EUR

The Euro locked in some gains last week as it benefitted from risk-off flows despite a mixed bag of data reports. The Italian government will be giving their 2020 budget on Monday, followed by the full year GDP growth, should the numbers miss forecasts, we can expect the Euro to weaken. German retail sales are expected to fall from December to January on Tuesday while their unemployment rate is expected to remain at 6%. European PMI numbers are due out on Wednesday and Thursday, any significant misses should impact the Euro. Risk sentiment is likely to have a significant impact on the pairs of the safe havens this week.

GBP

It was a choppy week for the British Pound as it rose on positive unemployment data, but it fell with a turn in risk sentiment in the second half of the week. The Pound will be hoping to make some gains this week as Sunak delivers the UK budget and road to recovery on Wednesday with the economic and fiscal forecasts following the budget it is expected to be the biggest driver for the Pound this week. The housing index which is due out Friday is expected to rise for February which is expected to indict a recovery in the housing sector.