The Kiwi dollar continues to post across the board being one of the top performing currency in the Forex markets. Besides the Swiss Franc, the Euro was noticeably weaker during the week despite some positive data released from Germany and Spain. The Australia dollar continues to remain weak as markets are pricing in further rate cuts in the near term, while on the same note, the recent CPI data from Canada coupled with BoC Governor Poloz’s speech last week has helped markets to reduce the likelihood of a March rate cut.
The Greenback has managed to recover from the losses from the previous weeks and looks poised for more upside gains should the bullish momentum continue.
Fundamentals for the Week 02 – 06 March
| Date | Event | Estimates |
| 2nd March | Australia AIG Manufacturing Index | – |
| Australia MI Inflation gauge m/m | – | |
| Japan Capital spending | 4.1% | |
| Japan final manufacturing PMI | 51.5 | |
| China HSBC Manufacturing PMI | 50.1 | |
| Australia Commodity prices y/y | – | |
| UK Nationwide HPI m/m | 0.4% | |
| Spain Manufacturing PMI | 55.2 | |
| Switzerland Manufacturing PMI | 47.4 | |
| Italy Manufacturing PMI | 50.2 | |
| Eurozone Final Manufacturing PMI | 51.1 | |
| Italy monthly unemployment rate | 12.9% | |
| UK Manufacturing PMI | 53.5 | |
| Eurozone CPI Flash estimates y/y | -0.5% | |
| Eurozone Core CPI Flash estimates y/y | 0.6% | |
| Eurozone unemployment rate | 11.4% | |
| US Core PCE Price index m/m | 0% | |
| US Personal income m/m | 0.4% | |
| US Final Manufacturing PMI | 54.3 | |
| US ISM Manufacturing PMI | 53.4 | |
| US Construction spending m/m | 0.4% | |
| US ISM Manufacturing prices | 36.2 | |
| 3rd March | Australia building approvals m/m | -1.8% |
| Japan average cash earnings y/y | 0.6% | |
| RBA Cash Rate | 2% | |
| RBA Rate statement | – | |
| Switzerland GDP q/q | 0.3% | |
| German retail sales m/m | 0.5% | |
| UK Construction PMI | 59 | |
| Eurozone PPI m/m | -0.5% | |
| BoE Gov. Carney speaks | – | |
| Canada GDP m/m | 0.1% | |
| New Zealand Global dairy index | – | |
| US IBD/TIPP Economic optimism | 48.3 | |
| 4th March | Australia GDP q/q | 0.7% |
| Fed Chair Yellen Speaks | – | |
| Spain Services PMI | 56.9 | |
| Italy Services PMI | 51.8 | |
| Eurozone Final Services PMI | 53.9 | |
| UK Services PMI | 57.6 | |
| Eurozone retail sales m/m | 0.2% | |
| ADP Nonfarm employment change | 219k | |
| US Final Services PMI | 54.8 | |
| BoC Rate statement | – | |
| BoC Overnight rate | 0.75% | |
| US ISM non-manufacturing PMI | 56.5 | |
| 5th March | Australia retail sales m/m | 0.4% |
| RBA Deputy Gov. Lowe speaks | – | |
| German factory orders m/m | -0.8% | |
| BoE Official bank rate | 0.5% | |
| ECB minimum bid rate | 0.05% | |
| ECB Press conference | – | |
| US Weekly unemployment claims | 319k | |
| Canada Ivey PMI | 46.2 | |
| US Factory Orders m/m | 0.1% | |
| 6th March | Japan leading indicators | 105.9% |
| Germany industrial production m/m | 0.6% | |
| Switzerland CPI m/m | 0.1% | |
| UK Consumer inflation expectations | – | |
| Eurozone revised GDP q/q | 0.3% | |
| Canada building permits m/m | 5.5% | |
| Canada labor productivity q/q | 0.2% | |
| US Nonfarm payroll change | 241k | |
| US unemployment rate | 5.6% |
Currencies/Events to Watch this Week
Will RBA deliver another rate cut? The markets seem to be pricing in another rate cut from the RBA for a 25bps. While it could be a very close call, expect to see some volatility in the markets. Besides the interest rate decision this week will see a number of economic data releases from Australia which includes the quarterly GDP and retail sales numbers. The yearly commodity price change is also likely to give further clues on the monetary policy from the RBA. All in all, the Aussie can see some big moves this week.
ECB – A non event? After the January ECB monetary policy, the markets will hear from Draghi and team this week, but what will the ECB do? The previously announced Eurozone QE will start off from March and the markets would like to hear more on this, especially on how the ECB will purchase the sovereign bonds. Greece is also likely to come up during the Q&A session. With the Euro already hovering near multi year lows, there isn’t much for Draghi to do to hammer the Euro even further.
US February Jobs report: With core inflation in the US coming out stable, the jobs report takes center stage this week. A continued robust growth in the jobs data will fuel bullish bets on a Fed rate hike this year (probably June). It won’t matter much if the NFP numbers fall below estimates, but as long as the numbers are above the 200k mark the markets will take it in their stride. The same goes for the unemployment rate. A + or – 1bps won’t quite affect the market sentiment in the larger scheme of things. All in all, the Greenback could see some stellar performance this coming week.
FX Majors Weekly Pivots
| R3 | R2 | R1 | Pivot | S1 | S2 | S3 | |
| EURUSD | 1.1549 | 1.1471 | 1.1331 | 1.1253 | 1.1113 | 1.1035 | 1.0895 |
| GBPUSD | 1.5769 | 1.5661 | 1.5550 | 1.5441 | 1.533 | 1.5221 | 1.511 |
| USDCAD | 1.2921 | 1.2792 | 1.2645 | 1.2516 | 1.2368 | 1.224 | 1.2092 |
| USDJPY | 121.314 | 120.577 | 120.101 | 119.364 | 118.888 | 118.151 | 117.675 |
| AUDUSD | 0.8077 | 0.7995 | 0.7903 | 0.7821 | 0.7730 | 0.7648 | 0.7557 |
