Smats FX Weekly Market Report | Monday 11 May 2020

USD

It was a topsy-turvy week for the US Dollar last week as historically bad economic updates saw the Greenback end in the red last week. This week members of the Federal Reserve will be giving speeches throughout the week as USD traders should keep their ears out for any updates. On Tuesday, analysts expect the inflation rate will drop by 0.8% month-on-month while the core figure will show a drop of 0.3%. Probably the most important data release for the Greenback comes on Friday where we expect April’s retail sales to have dropped by almost 12%.

Influences on HKD, SGD & AED

There is distinct lack of data out of our exotic currencies this week, the sole data release will be Hong Kong’s GDP growth rate on Friday, it is expected to have declined by 5.3% for the 1^st quarter of the year. Coronavirus updates and Dollar movements are likely to be the main catalyst this week.

AUD

The Australian Dollar topped the charts last week as global lockdown restrictions begin to ease, the AUD also benefitted from positive global risk sentiment and surprisingly good economic updates. A couple big data releases out of Australia at the beginning of the week with the NAB business confidence for April is expected to fall from -66 to -75 index points. Then the Westpac consumer confidence index has been forecast to fall from 75.6 to 65.0.

NZD

The Kiwi Dollar rode the wave of positive risk sentiment as it follows suite with the rallying AUD. The NZD is floating on better than expected job data, but the Reserve Bank of New Zealand interest rate decision on Wednesday could change things up should the central bank decide to slash rates, but no change is expected from the current 0.25%. Friday sees the business NZ PMI for March set to drop into contraction territory as it is expected to fall from 53.2 to 46.0.

EUR

Horrific business sentiment numbers and economic updates from Europe had traders fleeing as the Euro saw nothing but red last week. The most prominent catalyst for the Euro this week should be the GDP 2^nd quarter estimate that is forecast to show a contraction of 3.8% which is due out on Friday. The European Central Bank will be giving their economic bulletin in addition to members that will speaking throughout the week. Some other lower-tier Eurozone data is also going to be sprinkled out throughout the week, but none are forecast to have much of an impact on the rates.

GBP

Disastrous UK economic updates and no-deal Brexit fears sent the British Pound tumbling down last week. Wednesday is set to be a big day for the Pound with the release of their Balance of Trade figure for March, (Previous £-2.8 B, Expected £-1.7 B), as well as the GDP preliminary growth rate for Q1 (Previous 0.0%, Expected -2.4%). At the same time, manufacturing numbers as well as industrial production figures are set to be released. Bank of England Governor Bailey is set to participate in a webinar related to Brexit and COVID-19 which is likely to influence the price of the Sterling.