The US Dollar was in a steady uptrend this week erasing the losses from the previous week. The Greenback fell after last week’s FOMC decision to keep rates steady and to lower its rate forecasts. This week, Fed officials speeches saw a broad hawkish consensus forming supporting further rate hikes and, in turn, keeping the dollar well bid across the board. Price action was gradual for most of this week, but the major currencies continued to ease back lower giving up the gains from the prior week.
Economic data from the US saw a mixed housing data while durable goods orders declined broadly. The fourth-quarter GDP released today showed another revision with the fourth quarter GDP rising 1.40%, from the second estimates of 1.0%. However, corporate profits continued to decline for a second straight period in the fourth quarter of 2015, falling -8.1%.
In Canada, the annual budget release saw the unveiling of the much anticipated fiscal stimulus spending. While drawing up a budget deficit, the new infrastructure spending measures are aimed to boost growth as the Canadian government acknowledged the limits of monetary policy, a far cry from the rhetoric from other developed economies.
The Japanese Yen was mixed this week with the lack of any major fundamentals to draw upon. However, Friday’s consumer inflation prices saw the BoJ’s core inflation rising at the same pace of 1.10% seen in January. Economists now expect the BoJ to lower its inflation forecasts and push back the timing of reaching the 2.0% inflation target rate.
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Data from Eurozone was limited to flash services and manufacturing PMI, which were mixed but broadly encouraging. The shock terrorist attack in Brussels saw the markets turn edgy but soon regained momentum brushing aside the incident.
It was another week of losses for the British Pound, which incidentally turned out to be the biggest underperformer in light of the Brussels attack. The Pound continued to push lower as Brexit was back in focus. Besides a cabinet minister resigning from his post and highlighting the cracks within the ruling Conservative party, the Brussels terrorist attack was seen as yet another reason for Britain to leave the UK. GBPUSD erased the gains from the past two weeks as a result. Consumer inflation data also showed a weak performance rising 0.30%, below the forecasts of 0.40%, while retail sales continued to stay weak, all of which added to the downside pressure on the British Pound.
The commodity markets were considerably weaker over the past few trading sessions. While Gold initially spiked in the aftermath of the Brussels bombings, the precious metal gave up its gains and pushed lower. Gold prices are down by over -3.0% trading at $1217 an ounce. For the Oil markets, a surprising buildup in inventories saw prices fall this week as the May contracts settled lower at $38.5 a barrel with the Oil markets closed for trading on Friday.
Economic events this week
- Eurozone current account 25.4 billion vs. 26.3 billion
- The US existing home sales 5.08 million vs. 5.32 million
- Australia HPI q/q 0.20% vs. 0.10%
- RBA Governor Stevens speech
- Japan flash manufacturing PMI 49.1 vs. 50.6
- Eurozone flash manufacturing PMI 51.4 vs. 51.4
- Eurozone flash services PMI 54.0 vs. 53.5
- UK CPI y/y 0.30% vs. 0.40%; Core CPI y/y 1.20% vs. 1.20%
- German ZEW economic sentiment 10.6 vs. 8.2
- US HPI m/m 0.50% vs. 0.50%
- US flash manufacturing PMI 51.4 vs. 51.6
- US new home sales 512k vs. 512k
- US Crude Oil Inventories 9.4 million vs. 2.5 million
- New Zealand Trade balance 339 million vs. 75 million
- German import prices m/m -0.60% vs. -0.30%
- UK retail sales m/m -0.40% vs. -0.70%
- ECB targeted LTRO 7.3 billion vs. 24.3 billion
- US Core Durable goods orders m/m -1.0% vs. -0.20%; durable goods orders m/m -2.80% vs. -3.0%
- US flash services PMI 51.0 vs. 51.3
- BoJ Core CPI y/y 1.10% vs. 1.10%
- US Q4 GDP 1.40% vs. 1.0%