Supported by strong growth numbers, the US Dollar closed the week on a firm footing against the Euro and the Yen. Economic data over the week saw Q4 GDP surprising to the upside, rising 1.0% against expectations of a dip to 0.40%. For the first quarter, durable goods orders surged strongly including a broadly positive mix on the housing data. The economic numbers were further strengthened by US inflation finally starting to move in the right direction which has brought back to life further rate hikes from the Federal Reserve. The economic data this week marks the first week of positive numbers from the US which saw the Yen ease back as the markets showed signs of easing risk aversion.
The Canadian Dollar ended the week on a high note as volatility in Crude Oil prices lifted the CAD across the board. The US Dollar was the second top performing currency last week while the British Pound lost over 3.70% during the week followed by the Euro which is down -1.81% and into its second week of declines.
Chart of the Week (22/02 – 26/02) – GBPCAD
Fundamentals for the Week 29/02 – 04/03
|29-Feb||01:50||JPY||Retail Sales y/y||0.20%||-1.10%|
|JPY||Prelim Industrial Production m/m||3.20%||-1.70%|
|02:30||AUD||Company Operating Profits q/q||-1.70%||1.30%|
|AUD||Private Sector Credit m/m||0.50%||0.50%|
|07:00||JPY||Housing Starts y/y||-0.20%||-1.30%|
|09:00||EUR||German Retail Sales m/m||0.30%||-0.20%|
|12:00||EUR||CPI Flash Estimate y/y||0.00%||0.30%|
|EUR||Core CPI Flash Estimate y/y||0.90%||1.00%|
|17:00||USD||Pending Home Sales m/m||0.60%||0.10%|
|01-Mar||00:30||AUD||AIG Manufacturing Index||51.5|
|01:30||JPY||Household Spending y/y||-2.50%||-4.40%|
|02:30||AUD||Building Approvals m/m||-2.90%||9.20%|
|03:45||CNY||Caixin Manufacturing PMI||48.4||48.4|
|04:00||JPY||Final Manufacturing PMI||50.2||50.2|
|AUD||RBA Rate Statement|
|06:30||USD||FOMC Member Dudley Speaks|
|10:15||CHF||Retail Sales y/y||-1.20%||-1.60%|
|EUR||German Final Manufacturing PMI||50.2||50.2|
|11:00||EUR||Final Manufacturing PMI||51||51|
|16:30||CAD||RBC Manufacturing PMI||49.3|
|16:45||USD||Final Manufacturing PMI||51||51|
|17:00||USD||ISM Manufacturing PMI||48.5||48.2|
|USD||Construction Spending m/m||0.50%||0.10%|
|USD||ISM Manufacturing Prices||35.5||33.5|
|GBP||MPC Member Broadbent Speaks|
|15:15||USD||ADP Non-Farm Employment Change||185K||205K|
|16:00||GBP||MPC Member Cunliffe Speaks|
|17:30||USD||Crude Oil Inventories||3.5M|
|03-Mar||00:30||AUD||AIG Services Index||48.4|
|03:45||CNY||Caixin Services PMI||52.6||52.4|
|11:00||EUR||Final Services PMI||53||53|
|12:00||EUR||Retail Sales m/m||0.10%||0.30%|
|16:45||USD||Final Services PMI||49.8||49.8|
|17:00||USD||ISM Non-Manufacturing PMI||49.8||53.5|
|USD||Factory Orders m/m||2.10%||-2.90%|
|19:45||GBP||MPC Member Haldane Speaks|
|04-Mar||02:30||AUD||Retail Sales m/m||0.40%||0.00%|
|03:30||JPY||Average Cash Earnings y/y||0.20%||-0.20%|
|CAD||Labor Productivity q/q||0.20%||0.10%|
|USD||Average Hourly Earnings m/m||0.20%||0.50%|
|USD||Non-Farm Employment Change||195K||151K|
Currencies/Events to Watch this Week
AUD: The Australian dollar comes under significant risk this week as the week starts with the RBA’s interest rate decision on 1st of March. While rates are expected to stay unchanged at 2.0%, the RBA could potentially come out more dovish than last time with the AUD’s exchange rate being mentioned as well. A steady rally in the Aussie over the past week has seen the AUDUSD trade close to the $0.72 levels. Following the RBA’s statement, Australian quarterly GDP numbers are also expected later in the week with forecasts pointing to a dip to 0.50%, from 0.90% GDP growth seen a quarter before. The trading week ends with the Australian retail sales numbers on Friday forecasted to rise 0.40%.
JPY: The Yen could take a back seat this week with no major economic releases due. However, Monday starts with retail sales forecasted to grow 0.20% on a year over year basis, following a decline of -1.10% previously. On Friday Japan’s average cash earnings numbers are due with expectations of an increase to 0.20%. Cash earnings would be an important number to watch in light of last week’s BoJ inflation which increased 1.10%, down 1.20% previously..
EUR: From the Eurozone the week will see Services and Manufacturing PMI data coming out. Flash estimates released last week showed a broad slowdown which if confirmed by the final PMI data this week could keep the Euro pressured to the downside. Eurozone final inflation numbers are also up this week with expectations of a flat print on the headline at 0.0% while the Core CPI is expected to rise at a slower pace of 0.90%. Among other data from the Eurozone, unemployment rate is expected to remain unchanged at 10.4%, which was the lowest unemployment rate since 2012.
GBP: For the British Pound it will be interesting to see how the GBP trades this week. Monthly manufacturing construction and services PMI numbers are due with mixed expectations. However, a lot of BoE MPC members are due to speak over the week. Expect references to the Brexit campaign ahead of the BoE’s report due to be released on March 8th.
CHF: The Swiss Franc ignored dovish comments from SNB Chairman Thomas Jordan last week who hinted that prolonged use of negative rates would erase the intended consequences. The Swiss Franc remains fairly supported and this week’s data includes the quarterly GDP data which is expected to show that the Swiss economy expanded at a pace of 0.20%. Retail sales are also due with dovish forecasts pointing to a decline of -1.20% on a year over year basis.
USD: Data from the US is packed this week following a quiet Monday. ISM manufacturing is due on Tuesday with expectations of a soft print of 48.5 after last month’s dip to 48.2 pointing to a contraction in the manufacturing sector. ADP private payrolls on Wednesday are expected to show an increase of 185k jobs, a somewhat subdued number following 205k jobs added in January. On Friday, the February jobs report will be released which is expected to show that the US unemployment rate was steady at 4.90% while the average jobs added to the US economy is expected to rise 195k up from 151k from the previous month. Average hourly earnings are however expected to rise slower than the previous month at 0.20%.