SMATS FX Weekly Market Report | Monday 21 September 2020

USD

The US Dollar had a bumpy week last week but ended out as a loser after poor US data and promises from the Fed to lower rates in the long term. It is expected to be a quiet week data-wise in the US this week with the only important release coming on Friday as the durable goods orders for August is expected to climb by 2% in August after an increase of 11.2% in July. With trade tensions are on the rise with China, COVID-19 cases still on the rise and the general election fast approaching the USD is in for volatile week.

Influences on HKD, SGD & AED

Hong Kong released their inflation rate during the Asian session on Monday, it missed forecasts of a rise of 0.4% as it declined by the same amount. They are also set to release their current account for the 2^nd quarter, it is expected to read HK$-7 B. The Singapore Dollar continues its erratic wave and with just the inflation data out this week, it is likely that the SGD will be guided by the USD movements. The CPI data is due out on Wednesday morning and the headline figure is expected to fall by 0.7% YoY. On Thursday, Hong Kong are set to release their balance of trade, it is expected to increase from HK$-29.8 B to HK$-25 B.

AUD

It was a topsy-turvy week for the Aussie Dollar last week as mixed updates and counter-currency reports just about balanced each other out. Without any major economic updates or data reports out of the Land Down Under this week we will need to keep our eyes on risk sentiment and its counterparts to trade the AUD. On Tuesday, both the manufacturing and services PMI reports are expected to show a decline, the former from 53.6 to 53.4 and the latter from 49.0 to 48.5. Trade tensions continue to escalate between the two biggest economies in the world as the US and China go head to head which will continue to impact the demand for the Australian Dollar.

NZD

Better-than-expected data, counter-currency weakness, and positive comments from officials from the Reserve Bank of New Zealand allowed the Kiwi Dollar to take top spot last week. The Reserve Bank of New Zealand will be making their policy announcement on Wednesday, no major changes are expected ahead of the general election on 17 October. New Zealand’s trade balance is due out on Wednesday, after a sharp decline to NZ$282 M in July, experts have estimated that we will see a further decline to NZ$100 M in August 

EUR

The Euro struggled last week despite seeing some better-than-expected economic updates, but suggestions of a no-deal Brexit is putting a dampen on the mood in Europe. Eurozone flash PMIs are due out on Wednesday:

France: Manufacturing expected to climb to 51.1 from 49.8. Services likely to move to 51.8 from 51.5.

Germany: Manufacturing PMI looking for a 5^th consecutive climb from 52.2 to 52.7. Services PMI could inch higher from 52.5 to 52.9.

Eurozone: Manufacturing is expected to rise to 52.0 from 51.7. Services PMI is expected to rise from 50.5 to 50.9.

Some European Council members are going to Brussels at the end of this week to discuss COVID-19 with relations to Turkey, Russia and China, traders should look out for hints of additional stimulus to EU’s capital markets.

GBP

A string of positive economic updates allowed the Pound Sterling to get off to a strong start last week but as Brexit drama started to dominate headlines things quickly became volatile with the GBP ending the week mostly in the green. This week all eyes will be on Boris Johnson and his Internal Market Bill that could potentially break international agreements and cause a whole bunch of problems of its own. The United Kingdom are also staring down the barrel of further COVID-19 restrictions which could further dampen the economy’s recovery. Bank of England Governor Bailey is set to speak in a couple webinars this week which could provide insight to the BOE’s policies going forward.