Smats FX weekly market report | Monday 27 April 2020

USD

The USD rode the roller coaster of risk sentiment as historic oil prices sent the US Dollar all over the place. The economic data out of the United States continues to disappoint and it is expected that even more stimulus will be added to the market in order to keep the economy alive. A few catalysts out of the US this week include their GDP growth rate advance for the 1^st quarter which is expected to drop from 2.1% to -4.6% which is due out on Wednesday. Following the GDP news, the Federal Reserve will be making their policy decision, but we do not expect any changes to the current interest rate of 0.25%, market watchers should tune into the press conference that follows the rate decision. The monthly personal spending figure has been slated to drop from 0.2% to -6.3% on Thursday while the personal income has been forecast to drop from 0.6% to -1.0% for March.

Influences on HKD, SGD & AED

This week the Hong Kong Dollar is likely to see some movement early on with the release of their balance of trade figure in addition to the imports and exports figures for March. The balance of trade deficit has been forecast to widen from HK$-38.6 B to HK$-70 B while the exports have been slated to drop from 4.3% to -5.0% YoY and the imports from -0.1% to -11%. Singapore will be releasing their preliminary unemployment rate for the 1^st quarter; it is expected to have increased from 2.3% to 2.6%. On Thursday, the business confidence has been slated to drop from -12 to -36. Coronavirus cases are likely to drive the exotic currencies along with risk sentiment.

AUD

The Australian Dollar takes top spot from last week after climbing throughout the week likely from the increase in risk sentiment thanks to the oil crash. This week there are a handful of catalysts for the Aussie Dollar, Wednesday sees the release of the quarterly CPI report and analysts expect to see the quarterly CPI down to 0.2% despite the prospects of the annual version inching up to 1.9%. Chinese PMI numbers are likely to have a large impact on the Aussie Dollar. The manufacturing PMI is likely to dip to 51.0 from 52.0 while the non-manufacturing figure has been slated to drop from 52.3 to 50.5 in April when it is released on Thursday during the Asian session.

NZD

Some disappointing data out of New Zealand saw the Kiwi Dollar in the red against the majors last week but we did see a turnaround on Thursday as risk sentiment turned around as oil began its recovery. A couple of important data releases this week come in the form of their trade balance which is expected to widen to NZ$700M in March. Then Thursday sees the release of the ANZ business confidence numbers which the Reserve Bank of New Zealand tend to keep a close eye on, expectations are that the index will fall to -73 from -63.5.

EUR

Last week the Euro rose in the early part of the week thanks to a crash in the oil prices but then reversed later in the week as oil rebounded. Updates on European business did not help as they came in at historically low numbers. This week all eyes will be on the European Central Bank as they make their policy decision on Thursday. No actual change is expected in the rate, but traders should listen to Lagarde’s press conference which is scheduled for 13:30 GMT.

GBP

The Pound Sterling was the biggest loser last week as a combination of negative economic updates and horrific COVID-19 numbers saw the Pound weaken from the start of the week. Just a couple of lower-tier data releases out of the UK this week which could see the Pound react to counter currency action. On Tuesday, CBI realized sales index is likely to crash from -3 to -45 for April. April’s final manufacturing PMI is due out on Friday with expectations being revised to 32.8 from 32.9.