SMATS FX Weekly Market Report | Monday 08 2021

USD

After a strong first half of the week, the Greenback struggled on Friday as risk sentiment improved as it gained against EUR, NZD and JPY, losing against the Loonie, British Pound and Aussie Dollar. This week, there are a number of releases that can impact the US Dollar, the inflation data is due out on Wednesday, Fed monetary policy report is being released on Thursday and traders should keep listening out for any progress with Biden’s stimulus package.

Influences on HKD, SGD & AED

A completely quiet week for our exotic currencies will leave them vulnerable to not only Dollar movements, but COVID-19 vaccine rollouts and risk sentiment throughout the week. We did see the Foreign Exchange Reserve for Singapore check in at SG$491.1 B on Monday during the Asian session, it didn’t move the SGD pairs at all though. The US stimulus bill should influence these currencies more than most due to being pegged to the USD.

AUD

The Australian Dollar takes the spot at the top of the podium once more despite a rather bearish reaction to the extended quantitative easing program from the Reserve Bank of Australia. The Aussies will not be printing anything major this week which means that the AUD trends are likely going to depend on counter-currency movement and the overall risk sentiment. We do expect that AUD traders should price in the significant change in the price of iron ore, one of Australia’s largest exports.

NZD

The Kiwi Dollar ended up in the red against most of the majors despite getting off to a strong start with the better-than-expected employment data. Much like its Australian counter-part, New Zealand do not have much to release in terms of ground-breaking data. This will leave them vulnerable to risk sentiment and counter-currency action. The better-than-expected data from last week and expectations of a less dovish statement from the Central Bank should make the Kiwi Dollar a more attractive bet than the other comdolls.

EUR

The Euro lost ground on the side-lines last week without much to move the Euro, it lost against counter-currency strength. It looks like it could be another quiet week for the Euro after the slew of data due out on Tuesday. the German industrial production should climb by 0.1% for December while their trade balance surplus should narrow to €15.8 B. Italy’s industrial production should rebound by 2.1% after falling by 4.1% on Tuesday. Updates on the vaccine rollout in Europe should dictate price action this week.

GBP

The British Pound got off to a slow start but ended up being one of the best performing currencies of the week after the Bank of England toned down expectations of negative interest rates with MPC members looking optimistic for the recovery of the UK economy. There is not much in terms of top-tier reports due out for the UK this week but the bulls will be hoping to extend the GBPs rallies with the preliminary Q4 GDP data, and industrial production which is due out on Friday. It will largely be counter-currency action that will move the Pound this week.