SMATS FX Weekly Market Report | Monday 24 August 2020

USD

After a slow start to the week the USD took off after the FOMC minutes and a positive economic update resulted in the USD ending off the week in the green. The US Dollar looks like it will have quite an active week this week. The durable goods order for July is expected to fall from 7.3% to 2.9%. On Thursday, the GDP growth rate estimate is likely to show a whopping contraction of 32.9% should this figure miss expectations it should have a large impact on the Greenback. Personal spending and income for July is due out on Friday, we expect to see a 1.2% increase in spending while personal income is expected to decline by 0.4%.

Influences on HKD, SGD & AED

The Singapore Dollar was not impacted by the early release of their inflation rate for July, it checked in at the expected -0.3%. They will be releasing their PPI for July on Friday in addition to their export and import prices, all of which dropped by 7-9% in June. Hong Kong are releasing their balance of trade on Wednesday; it is expected to show HK$-27 B from the HK$-33.3 B in June. Exports are forecast to have fallen by 1.3% while imports have decreased by 7.1%. The Dirham hasn’t seen too much action and this week should be no different with no major data releases out of the UAE.

AUD

A great start to the week for the AUD thanks to the RBA monetary policy meeting minutes was driven down by a turn in risk sentiment and concerns regarding the growth of the Aussie economy. With the RBA announcing that they don’t expect any economic growth until the 4^th quarter of the year and that they won’t be lifting interest rates for at least 3 years, the Aussie Dollar will move in line with the overall risk appetite and any escalation of the US-China trade spat should impact the rates further.

NZD

Much like the Aussie Dollar, the Kiwi Dollar started last week off well but speculation of negative interest rates and a turn in risk sentiment sent the NZD lower through the second half of the week. New Zealand’s retail sales figures for the 2^nd quarter were out during Asia’s trading session on Monday, the headline figure came in at -14.6% while it was forecasted to show -4%. Balance of trade for July is set to show NZ$100m from the NZ$426m in June. Rising COVID-19 cases in key cities could mean the Kiwi takes a hit due to the overall risk-taking and demand for the Kiwi.

EUR

Growing fears of a new wave of COVID-19 and the lockdown that comes with a possible second wave sent the Euro down. The Euro also struggled after a poor batch of PMI numbers and dovish commentary from the ECB. This week we have some medium tier reports out of the larger European economies, the German GDP is expected to have fallen by 10.1% in the 2^nd quarter of the year while the GFK consumer confidence is likely to improve from -0.3 to 2.5. France will be releasing their preliminary GDP for the 2^nd quarter; analysts have forecast a contraction of 13.8%.

GBP

It turned out to be a choppy week for the Pound Sterling as Brexit and counter currency movement drove the GBP pairs. It looks like it is going to be another quiet week for the Pound meaning that the focus will be back on Brexit and any counter currency headlines. Negotiations between the UK and Europe will be under the spotlight with the next deadline of 02 October fast approaching. BOE Governor Andrew Baily is set to give a speech in the Jackson Hole Summit on Friday, GBP traders should keep an ear out for any news regarding the BOE thoughts on the current economic situation.