SMATS FX Weekly Market Report | Monday 26 October 2021

SMATS FX is proud to provide our weekly analysis of currency markets and exchange rates.

USD

Over the past week the USD has weakened against 16 of the top 20 currencies. There has been negative movement against all the top 10, with the most notable being -1.13% against the NZD. On the other hand we saw the USD strengthen 4.34% against the TRY, which was as a result of an unexpected and uncalled-for rate cut in Turkey.
Data wise, we have not seen all that much action from the US, the major events being speeches from the various Fed members and an improved Jobless figure for October. Coming up we have Durable goods orders for September, which is expected to decline by 1%, from a 1.8% decline the previous period. The main event this week will come from the US GDP data on Thursday, this is expected to come in at 2.5%, from a previous 6.7% level, so it holds the power to hit the USD hard if it does not perform.

U.K

Last week, The United Kingdom released their Inflation Rate figure for September. Inflation came in at 3.1% year-on-year, slightly lower than expected, after the 3.2% reading in August. Month-on-month numbers were reported at, 0.3%, following the 0.7% reported price rise in the month prior.
Retail Sales data was also released last week, for the September period. Retail Sales growth came in -0.2% , underperforming the expectations of 0.5% growth, furthering the 0.9% contraction in August. GFK Consumer Confidence for the month of October was also released, at -17. This reading came in lower than analyst forecasts of -14, after the prior reading of -13.
This week, National Housing Prices for October will be released, and is expected to rise by 0.5% after the prior 0.1% uptick. Mortgage Approvals & Lending figures, as well as BoE Consumer Credit figures for September.

EUR

Volatility on the EUR picked up significantly this past week. We saw the common currency lose ground overall against the GBP, hitting an 18month low on Monday. However, some significant swings were noted in both directions. In terms of other majors, the EUR traded mainly flat and ranged for most of the week against the USD and JPY.
This week saw investors question just how temporary rising inflation is considering the continued supply chain bottlenecks and rising energy costs. More telling is the ECB discussion on amending their budget rules to account for more emergency spending in the EURO block post pandemic. This does not bode well for the inflation outlook in the medium term as government spending has been known to keep inflation high in the medium to long term.
Also noted this week was the announcement of the resignation of Jens Weideman, a known ECB hawk. This increases the prospects for longer loose monetary policies as power dynamics at the ECB becomes more skewed towards the dovish policy makers at the ECB.

AUD

Last week was rather light on the data front coming out of Australia, as the country emerged from the longest COIVID-19 lockdown recorded to date. Nevertheless, both Flash Services & Manufacturing PMI were released, providing further insight into the economic activity during October. The Services PMI was recorded at 52, exceeding the expected increase to 48 after the previous 45.5 reading. Manufacturing PMI came in at 57.3, climbing from 56.8 in the month prior.
This week, Australia will release their Inflation Rate data for Q3 of 2021. Year-on-year inflation is expected to fall to 2.8%, after the 3.8% number in Q2. Quarterly price pressure is forecasted to rise by 0.7%, adding to the 0.8% increase in Q2. Preliminary Retail Sales for September will also come due, after the previous decline of 1.7%.

NZD

Last week was rather light on the data front, coming out of New Zealand. Credit Card Spending declined by 12.9% (YoY) in September, furthering a 6.9% fall in the month prior.
This week, New Zealand’s Balance of Trade at September will be reported; The countries trade deficit is expected to narrow significantly, after a reading of NZD $2144 million in August.
Next week, we have the released of New Zealand’s Q3 Unemployment Rate. The Unemployment Rate is expect to edge lower to 3.9&, from a previous reading of 4.0%.

ZAR

Last week, South Africa’s September Inflation Rate was released. Year-on-year inflation was reported at 5%, in line with expectations, up from 4.9% in August. Prices rose 0.2% in September, adding to the 0.4% increase in the month prior. Main upward pressure came from prices of transport (10.1%), particularly fuels, as well as housing & utilities (4%).
This week, South Africa’s Balance of Trade at September will come due. South Africa’s trade surplus is expected to decline from R42.4B in August, towards R28B.
September PPI figures will also be released this week, to complement the inflation data released last week. PPI is expected to come in at 7.2% over the year, and 0.8% over the month.

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