SMATS FX weekly market report | Monday 24 February 2020

USD

The Greenback was one of the better performing currencies last week as the US Dollar continues to be a haven against the uncertainties surrounding the Coronavirus. On Thursday, durable goods orders are likely to decline to -2% on the back of a fantastic December reading of 2.4%. At the same time, the second GDP growth rate estimate for the 4^th quarter of last year is likely to remain at 2.1%. Finally, on Friday, the personal income is likely to increase by 0.3% month on month while the personal spending is likely to increase by 0.2%, both figures are released for January of this year.

Influences on HKD, SGD & AED

The Singapore Dollar is expected to decline on the back of poor inflation data that was released during the Asian session on Monday. The headline figure remained at 0.8% while the current account fell short of expectations when it clocked in at SG$19.6. Their PPI figure for January is set to be released on Friday, we can expect it to bounce back to 2.1% from -0.9%. Hong Kong will be releasing their balance of trade figure for January on Tuesday; we can expect it to rebound to HK$-10 B from HK$-32.5 B. Our exotic currencies are also likely to be heavily influenced by the USD this week.

AUD

Much like the Kiwi Dollar, the Aussie Dollar struggled on the back of increased Coronavirus updates. This week, China will be printing its first official PMI readings since the Coronavirus outbreak, the Australian Dollar is likely to react to the release of this data due to China being the biggest importer of Australian goods. The Australian quarterly capital expenditure is set to be released on Thursday; market analysts expect to see a rise of 0.4% for the final quarter of last year.

NZD

The Coronavirus is starting to take its toll on the NZD and AUD as both Australasian currencies were dragged down by risk-off sentiment last week. Hard data can boost the strength of the NZD with the release of their quarterly retails, trade balance and most importantly, their ANZ business confidence. The retail sales missed forecasts when they were released during the Asian session on Monday, expectations were that it would clock in at 5.1% for Q4, but the figure showed a dismal 3.3% increase year-on-year. Then the balance of trade figure is likely to return to a negative balance after showing a NZ$547 M surplus for December. Finally, the business confidence, which is due out on Friday is expected to come in an index of -18 compared to the -13.2 we saw in December.

EUR

The Euro continued its struggles last week as it dropped to a key resistance against the Pound at 1.2 GBP/EUR. Germany will be sprinkling out some lower to mid-tier data reports throughout the week. Starting on Monday, the IFO business climate index is likely to fall from 95.9 to 95.0. Tuesday sees the release of the GDP growth rate for the final quarter of last year, we expect the economy to have grown by 0.4%. Then on Friday, Europe’s largest economy will be releasing their preliminary CPI data, this is expected to have quite a large influence on the rate as the German economy has been struggling in the last few months, hopefully, positive data here can give the Euro a much-needed boost. When it is released on Friday, we can expect a rebound of 0.3%.

GBP

The British Pound had a mixed week last week as it started to taper off towards the end of the week. This week we don’t have much in terms of hard data reports to move the Pound’s strength. We will have to make do with MPC speeches and the GFK consumer confidence report that is due out on Friday. On Tuesday, EU leaders will be meeting to discuss the general outlook of the European economy, Brexit strategy is likely to be on the agenda, so market watchers can keep their ears to the ground for any developments there. On Friday, the GFK consumer confidence, which is a measure of the level of consumer confidence in economic activity, is likely to gain 1 basis point from -9 to -8.