SMATS FX Weekly Market Report | Monday 17 February 2020

USD

The US Dollar soared last week as the Dollar Index climbed by 0.5% last week and it is expected to continue throughout this week with the weakness in Europe. Concerns over the impact of the Coronavirus spreading through China and a robust US economic performance, the US Dollar has seen some phenomenal gains since the turn of the year. The PMI numbers for February are due out on Friday, the services PMI is likely to remain at 53.4 while the manufacturing PMI is likely to drop from 51.9 to 51.5.

Influences on HKD, SGD & AED

The Singapore Dollar is likely to weaken on the back of weak balance of trade data early on Monday morning while the non-oil exports are expected to drop by 4.5%. Hong Kong will be releasing their unemployment rate on Tuesday; we can expect the headline figure to stick at 3.3%. Then they will be releasing their inflation rate data on Thursday, expectations are that it will climb to 3% from 2.9%.

AUD

Australia will be releasing their labour market report as well as the Reserve Bank’s meeting minutes this week. The AUD has suffered from risk-off sentiment due to the ongoing Coronavirus scare. On Tuesday, the RBA will be releasing their meeting minutes after they decided to keep their rates unchanged, a decision which saw the AUD climb. The minutes could give tips as to what the RBA have in store for the rest of the year as some market experts have said that they expect to see a rate cut sometime this year.  Analysts expect that the economy added a net of 10 000 jobs in January, this will see the unemployment rate stick at 5.1%. On Thursday, we can expect to see a dip from 49.6 to 48.9 in the manufacturing PMI and the services PMI is likely to climb to 52.4 from 50.6.

NZD

It is a light week in terms of hard-hitting data coming out of New Zealand this week, this doesn’t mean that the NZD will be immune to the ongoing volatility. The quarterly PPI report will be released on Wednesday, although it doesn’t normally impact the rates too much, in a week without much data we can expect it to have an inflated impact on the rate. Producer input prices climbed by 0.9% in Q3 and we can expect to see a further increase by 0.4% for the Q4. The output prices, which climbed by 1% in Q3 last year is expected to accelerate by 0.3$ for the final quarter of last year.

EUR

The Euro struggled throughout last week, and they will be hoping that the ECB minutes might turn things around this week. First up on Tuesday we can expect the German ZEW economic sentiment index to drop from 26.7 to 20.0 for February. The Eurozone flash PMIs are set to be released on Friday; most are likely to decline. Any reading above 50.0 will signal expansion and anything below 50.0 reflects contraction.

• French services to climb from 51.0 to 51.4 while the manufacturing figure is likely to dip from 51.1 to 50.8.
• Germany’s PMIs are also set to fall this week with the manufacturing figure set to drop to 53.9 from 54.2 and the services figure should slide top 44.8 from 45.3.
• The Eurozone is set to take less of a beating as the services figure is likely to drop to 52.4 from 52.5 while the manufacturing figure should dip to 47.4 from 47.9.

GBP

The Pound Sterling was one of the better performing currencies last week. This week we have a bunch of middle-tier data releases to shift the Pounds strength. On Tuesday we will have a look into the UK jobs data as the claimant count is expected to come in at 22 600 while the unemployment rate is likely to remain at 3.8%. The inflation data is out of Wednesday and we can expect the headline CPI figure to bounce up to 1.7% from 1.3% while the core CPI is likely to rise to 1.5% from 1.4%. The flash PMI readings are expected to drop across the board on Thursday with the manufacturing figure likely to dip to 49.7 from 50.0 and the services figure from 53.9 to 53.4.