SMATS FX Weekly Market Report | Monday 07 September 2020

USD

A rare positive week for the US Dollar as it gains on the back of positive business sentiment numbers and uplifting economic updates. A shortened trading week in the US thanks to Labour Day will see the US Dollar a little more volatile than usual. The main driver this week for the US is expected to be the inflation rate for August which is set to be released on Friday, it is expected to climb from 1.0% to 1.2% while the core inflation rate is likely to remain at 1.6%. The Greenback will be hoping to continue its impressive week last week, but it will mostly be down to risk sentiment and counter currency action this week to drive the USD.

Influences on HKD, SGD & AED

Our exotic currencies have taken a turn along with the US Dollar as they start to see some upside for the first time in weeks. A week without any major data releases mean that the local lockdown situation and pandemic updates are likely to drive the exotic currencies this week. The movements of the US Dollar and its counter currencies are likely to impact the SGD and HKD as the US Dollar continues its turnaround.

AUD

The Aussie Dollar got off to a flyer at the start of the week, but things quickly soured as disappointing economic updates forced the AUD to be the worst performing major currency for the week. This week, the NAB business confidence survey is set to dip from -14 to -18 when it is released on Tuesday. On Wednesday, the Westpac consumer sentiment is likely to improve from -9.5% to -3.1% in September. With Australia doing most of its trading with China, the Chinese data that is set to be released in the first half of the week is likely to impact the Aussie Dollar so traders should keep an eye out for key Chinese data this week.

NZD

Positive risk sentiment and counter-currency flows drowned out the negative economic updates and allowed the Kiwi to end the week in the green last week. This week the quarterly manufacturing sales are expected to fall by 12%, ANZ business confidence has been forecast to improve from -42.4 to -41.8 in August and the business NZ manufacturing index is expected to decline from 58.8 to 58.2. Australian and Chinese data reports are likely to impact the NZD this week but without many top-tier data reports out of the other major currencies we will be looking towards pandemic related updates and the broader risk sentiment to drive the NZD this week.

EUR

Broader risk sentiment sent the Euro down last week with a mixed bag of economic and business updates unable to pull the European currency up into the green. This week the European Central Bank will be making their policy decision, it is widely expected that the ECB will keep rates unchanged, but Euro traders should listen out for Lagarde’s commentary. Germany, France, and Italy are releasing their industrial production numbers for July throughout the week, we expect a decline from 8.9% to 4.5% for Germany, France and Italy look set for gains in the 3% region.

GBP

A great start to the week for the Pound Sterling turned around after Brexit uncertainties and negative commentary from the Bank of England sent the Pound lower in the second half of the week. Brexit talks are likely to dominate headlines this week and drive the intraday Pound pairs with the transition deadline of 31 December fast approaching. July’s monthly GDP is expected to show an increase of 6.3% after gaining 8.7% in June. Industrial production figures are due out on Friday, it is expected to climb by a further 4% after gaining 9.3% in June.