SMATS FX is proud to provide our weekly analysis of currency markets and exchange rates.
GBP
- The U.K continues to lead the race with their vaccination campaign, with over 10 million people having now received 2 doses of the jab. Coupled with a slumping US dollar, the GBP/USD pair traded with a topside tilt, rising up and touching 1.40 before closing the week around the 1.3875 level. The pair appreciated by 0.32% during the week and kicked off the week today on the front foot.
- UK Business Optimism Indicator Hits 48-Year High as the CBI's quarterly gauge of manufacturing optimism in the UK jumped to 38 in the second quarter of 2021. Retail sales also surged, rising by 5.4 percent month-over-month in March. These figures exceeded the market consensus for a 1.5% increase, following an upwardly revised 2.2% rise in February.
- Unemployment Rate fell to 4.9%, from 5% last month, exceeding expectations of a slide increase in unemployment. Nevertheless, the number of people claiming unemployment benefits in the UK increased by 10.1 thousand in March of 2021, following an 86.6 thousand surge in February. The claimant count rate came in at 7.3 percent, the same as in February.
- With the U.K economy showing promising signs of recovery, inflation is becoming of greater concern. The Inflation Rate rose from 0.4% to 0.7% in March, a significant uptick for the region. Although this is coming from a very low base, the rise could be early signs of soon-to-come inflationary pressure. CPI rose by 0.30% month-on-month.
USD
- Over the past week we have seen the USD progressively weaken from a moderately strong position. Against the Sterling it had a volatile week with movements from 1.38 to 1.4 and opened this week in the middle at 1.39. On the EUR front it has been a steady slope of decline for the Dollar, we have seen movements from 1.194 to 1.121 where it opened today.
- Data wise the past week has nothing much to show and the USD weakness was mostly moved by the continuous stance of the US fed that they will keep interest rates lower for longer.
- The major even this coming week is the US Fed Interest rate decision on Wednesday. Nothing is expected to change here, but the tone of the press conference post the fact has the ability to move the markets.
EUR
- EUR market composite PMI was released on Friday and came in at 53.7 compared to 53.2 the previous month. This points to expanding economic activity. This expansion is expected to continue as European markets open further and vaccines becomes more useful.
- There appears to be no immediate end to the economic stimulus program (PEP). This was reiterated by the ECB president during her press conference on Thursday. We can therefore expect the EUR to remain strong against major currencies such as the USD and GBP for now.
- The EUR Therefore continued to gain against the USD and GBP last week. This is evident in the fact that it opened at roughly EUR/GBP 0.864 and closed at 0.871 for the week.
AUD
- The Aussie dollar had quite stagnant week last week, weakening about 0.1% against the pound and strengthening about 0.2% against the greenback. Retail Sales figures for March were released on Wednesday, increasing by 1.4% which was higher than expected and thus, helping the Aussie maintain its gains from the previous week.
- The inflation rate pertaining to the first quarter is set to be released on Wednesday and is expected to increase by 1%.
NZD
- New Zealand continues to show signs of improving growth. Services PMI rose to 52.4 in March, from 49.7 in February, marking the highest reading in 8 months. A steep increase in new orders and in business activity has helped to support the local economy. Credit Card Spending also rose by 2.2%, exceeding an expected YoY decline of 10%.
- Annual inflation rate in New Zealand increased to 1.5 percent in the first quarter of 2021. The Consumer Price Index in New Zealand increased 0.8 percent QoQ in the first three months of 2021, following a 0.5 percent rise in the previous quarter. Transport prices surged 3.9 percent. Housing and household utilities went up 0.9 percent.
- Strong local data, coupled with a mediocre week for developed-market currencies, saw the Kiwi Dollar gain some ground during the weeks trade. The GBP/NZD pair depreciated by 0.34% during the week, closing at 1.9290 from an open of 1.9360. USD/NZD shed 0.66% during the week, trending downwards from an open of 1.40 and closed the week around the 1.3905 mark.
ZAR
- The Rand has made record gains in the month of April by climbing 4.2% against the Dollar and 3% against the Pound. It is currently trading at 14.23 and 19.82 respectively.
- Thin liquidity is expected this week as there is a public holiday coming up on Tuesday so traders are expected to sit tight as there is also very little news events in the coming week to rally the currency in any direction.
SGD, HKD & AED
- On the back of another round of US Dollar headwinds, our ‘exotic’ currency pairs continued to falter against developed markets. The GBP/HKD and GBP/AED pairs both trended upwards during the week, appreciating by 0.17% and 0.32% respectively. The Singapore Dollar help up relatively well against the pound, as GBP/SGD moved downwards from 0.8450 and closed the week around 1.8405.
- This week, Singapore’s Q1 Unemployment rate will be released, along with the Q1 Business Confidence and Industrial Production for March.
- Hong Kong will release their Balance of Trade for March, which is forecasted to widen to -H$21B, from a deficit of -H$14.B in March. GDP Growth for Q1 is also due, and is expected to decline by 0.3% after previous quarter saw growth of 0.2.
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