SMATS FX Weekly Market Report | Monday 17 August 2020

USD

The US Dollar woes build as Non-Farm Payrolls shows a continued downtrend and retail sales misses market consensus. With all the unrest in the US now with the impending elections, rising COVID-19 cases and poor economic performance, the Greenback remains on the backfoot. The main driver for the US Dollar this week will be the FOMC meeting minutes that is due out on Wednesday. August’s PMI numbers are due out on Friday, it is expected that the manufacturing figure will show 52.0 while the services figure will rise from 50.0 to 51.5. Fed members will also be giving speeches throughout the week that could impact the intraday trends of USD pairs.

Influences on HKD, SGD & AED

It is set to be a busy week for the Hong Kong Dollar as they release their unemployment rate for July on Wednesday, it is expected to inch higher to 6.3%. Then on Thursday, they will be releasing their yearly inflation rate for July, it has been forecast to show 0.5%. Singapore released their balance of trade figure for July during Monday’s Asian session, it missed the forecast of SG$4.5B and came in at SG$3.3B but it did not impact the strength of the currency. We are set to see United Arab Emirates’ inflation rate check in at -2.1% for June when it is released on Monday.

AUD

It was a mostly negative week for the Aussie last week as COVID-19 related news overshadowed a better-than-expected jobs data and positive risk sentiment. This week, the Reserve Bank of Australia will be releasing their meeting minutes on Tuesday after they kept interest rates unchanged at 0.25% and were positive about the economic recovery in the Land Down Under. Much like last week, Coronavirus cases in Australian and the governments lockdown plans are likely to continue to impact the AUD. The FOMCs meeting minutes and PMI data from the US is likely to also have an impact on the Australian Dollar this week.

NZD

The Kiwi Dollar took big hits last week as they record fresh COVID-19 cases after being Coronavirus-free for 102 days. Auckland has now been placed into lockdown once more, leaving the NZD as the net-loser of the week. New Zealand officials will be releasing the quarterly PPI report on Tuesday during the Asian trading session, input prices are expected to rise to 0.1% while output prices are forecast to climb to 0.3%. COVID-19 cases are likely to be the main catalyst this week as we see how the government’s plans to combat the virus for the second time.

EUR

Improving European sentiment and global risk aversion late on in the week allowed the Euro to take top spot in a light week of news and data releases. The European Central Bank kept their interest rates unchanged last month and chairman Lagarde hinted that it would keep its light policies as the economy recovers. We have PMIs from the larger European economies due out this week, the French manufacturing and services PMI is forecast to improve by 2-4 index points while the German manufacturing figure is slated to rise from 51.0 to 55.2 while the services figure is expected to fall from 55.6 to 55.0.

GBP

It was a mixed week for Pound pairs last week as volatility remained relatively low in the absence of any major catalysts. The UK entered a recession last week after the GDP plunged by a massive 20.4% in the 2^nd quarter of the year. This week the UK will be releasing their inflation rate for July, it is expected to climb from 0.6% to 0.8%. On Friday, the GFK consumer confidence for August is expected to rise slight from -27 to -24. July’s retail sales are also due out on Friday, it is expected to have increased by 0.4% YoY and 2.5% MoM.