Euro resumes its downtrend
The Single currency finally seemed to have found its direction this week after ranging for the most part. EURUSD broken down from its short term support at 1.1203 this week after ECB gave more detailed views for its QE plans. At the time of writing, EURUSD was down -1.96% since the start of this week. The single currency practically ignored the fundamentals which started showing signs of stabilizing and was weaker into the start of the week as Manufacturing PMI across various Eurozone economies fell below estimates.
- Eurozone final manufacturing PMI 51 vs. 51.1
- Eurozone CPI flash estimate y/y -0.3% vs. -0.5%; Core CPI y/y 0.6% as expected
- German retail sales 2.9% vs. 0.5%
- German factory orders m/m -3.9% vs. -1%
- Eurozone revised GDP q/q 0.3% as expected
Sterling weakens as BoE remains neutral
The British Sterling turned weaker despite manufacturing and construction PMI beating estimates. BoE stood pat on policy and left little to feed the markets. The Pound weakened against the Greenback and also host of other currencies including the Yen and the Aussie dollar. For the week, the Sterling dropped close to -1.56%, while GBPAUD was down -1.6% approximately at the time of writing.
- Manufacturing PMI 54.1 vs. 53.5
- Construction PMI 60.1 vs. 59
- Mortgage approvals 61k vs. 61k
- BoE interest rate 0.5%, unchanged
- Services PMI 56.7 vs. 57.6
RBA holds interest rates steady, Aussie modestly stronger
The Australian Dollar managed to hold its ground for a considerable part, especially against the Greenback. The RBA left policy unchanged while hinting that further rate cuts were possible and that the board would look at it on a month by month basis. GDP data released this week was less than estimates but showed a steady growth, rising 0.5% from 0.4% previously while most of the other fundamentals remained largely in line with expectations.
- Commodity prices y/y -20.6% vs. -19.2% previously
- Australia building approvals m/m 7.9% vs. -1.8%
- RBA cash rate 2.25% vs. 2%
- Quarterly GDP 0.5% vs. 0.7%
US Dollar resumes its bullish trend
After weeks of consolidation, the Greenback managed to break out to the upside and looks poised to head to the 100 psychological mark. Economic data from the US for the most part remained mixed but the markets were more clearly focused on the Fed’s testimony to the Senate Banking committee. While the markets initially sold off on noting that the Fed members were comfortable keeping the word “Patient” in the FOMC statements, the sentiment soon turned around after realizing that Yellen’s testimony was in fact hawkish and that a June rate hike was quite a possibility.
- Core PCE Index m/m 0.1% vs. 0.1%
- Final manufacturing PMI 55.1 vs. 54.3
- ISM Manufacturing PMI 52.9 vs. 53.4
- ADP nonfarm payroll change 212k vs. 219k
- ISM non manufacturing PMI 56.9 vs. 56.5
- Weekly unemployment claims 320k vs. 293k
- Nonfarm employment change 295k vs. 240k
- Unemployment rate 5.5% vs. 5.6%
- Average hourly earnings m/m 0.1% vs. 0.2%; y/y 2% vs. 2.2%
BoC keeps rates on hold, but Canadian dollar still weak
Bank of Canada left interest rates unchanged in a widely expected move on account of a better than expected GDP and CPI data last month. The Canadian Dollar although reacted bullish on the news failed to keep up its gains, trading very choppy against the Greenback. Fundamental data for the week was also largely mixed. Going forward, markets will be focusing on further data in the month as the BoC remains on standby.
- GDP m/m 0.3% vs. 0.2%
- BoC interest rates 0.75%, unchanged
- Ivey PMI 49.7 vs. 49.4
- Building permits -12.9% vs. -4.2%
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