The US Dollar turned out to be the weakest currency last week, thanks to the dovish comments by Fed Chair, Janet Yellen. Giving a speech at the Economic Club of New York, the Fed chair said that the central bank would take a cautious approach to rate hikes and more evidence was needed to gain confidence that inflation was rising. The comments sent the Dollar plunging, and even a better ISM manufacturing reported failed to sustain the declines. Last week saw the release of the March jobs report which showed that the US unemployment rate moved back to 5.0% following two months of staying steady at 4.90%. But the March report was stronger with the participation rate and the average hourly earnings increasing, compared to a month ago.
The weaker Dollar sent the commodity-linked currencies higher over the week. The Kiwi was the top currency, rising over 3.26% in the week followed by the Australian dollar. However, concerns remain if this current rally in the commodity-linked currencies is justified given how a stronger exchange rate for these currencies could hurt exports.
Fundamentals for the Week 04/04 – 08/04
|04-Apr||02:30||AUD||Building Approvals m/m||2.10%||-7.50%|
|AUD||Retail Sales m/m||0.40%||0.30%|
|08:00||EUR||Spanish Unemployment Change||21.3K||2.2K|
|15:00||USD||Factory Orders m/m||-1.50%||1.60%|
|15:30||CAD||BOC Business Outlook Survey|
|AUD||RBA Rate Statement|
|07:00||EUR||German Factory Orders m/m||0.50%||-0.10%|
|15:00||USD||ISM Non-Manufacturing PMI||54.1||53.4|
|15:00||NZD||GDT Price Index||-2.90%|
|20:00||CAD||Gov Council Member Wilkins Speaks|
|06-Apr||02:45||CNY||Caixin Services PMI||51.4||51.2|
|08:00||AUD||RBA Assist Gov Kent Speaks|
|15:30||USD||Crude Oil Inventories||2.3M|
|17:20||USD||FOMC Member Mester Speaks|
|19:00||USD||FOMC Meeting Minutes|
|07-Apr||08:00||CHF||Foreign Currency Reserves||571B|
|08:30||GBP||Halifax HPI m/m||1.10%||-1.40%|
|12:30||EUR||ECB Monetary Policy Meeting Accounts|
|13:30||CAD||Building Permits m/m||2.30%||-9.80%|
|Tentative||EUR||ECB President Draghi Speaks|
|22:30||USD||Fed Chair Yellen Speaks|
|08-Apr||01:15||USD||FOMC Member George Speaks|
|09:30||GBP||Manufacturing Production m/m||-0.10%||0.70%|
|GBP||Goods Trade Balance||-10.1B||-10.3B|
Currencies/Events to Watch this Week
AUD: The week ahead is busy for the Australian dollar with the RBA’s meeting looming. While expectations are for interest rates to remain unchanged at 2.0%, the recent appreciation of the Australian dollar is likely to see some verbal talk down of the exchange rate. Besides the RBA’s meeting, building approvals for the month of February are expected to show a 2.0% increased following January’s decline of 7.50%. Retail sales are expected to keep up the upward trend with forecasts of a 0.40% increase up from January’s 0.30% increase. AiG Construction and services data are due as well with services expected to remain above the 50-level of expansion while construction is expected to show a contraction in the sector.
NZD: Data from New Zealand for the week ahead is relatively light in comparison to its peers. Global dairy trade index is the only main event to look forward to over the course of the week.
JPY: Economic data from Japan continues with the index of business conditions due for release on April 6th with expectations of a slip to 99.8 in February, following January’s 101.8 print. Japan’s trade balance and current account data will also be released over the week.
CNY: China is closed on Monday but economic data over the week includes the Caixin services PMI which is expected to show a modest increased from 51.2 in February to 51.4 in March. With the manufacturing, PMI released last week showing signs of stabilizing the services PMI is likely to meet expectations.
EUR: From the Eurozone economic data is packed starting with the Sentix investor confidence which is expected to rise to 6.9 following 5.5 previously. The Eurozone unemployment rate is expected to remain unchanged at 10.30%. Most importantly, ECB President Mario Draghi will be speaking on Friday, which will also see the ECB’s monetary policy meeting minutes being released. With the Euro showing strong appreciation to the Dollar, Draghi’s comments will be closely watched.
GBP: Economic data from the UK this week includes the construction and services PMI, which is expected to see a broad improvement from February’s numbers. Last week, the manufacturing PMI disappointed adding to Sterling’s losses. Industrial and manufacturing production data is expected to see a 0.10% decline and 0.10% increase, both subdued readings from a month ago.
CAD: Canadian data starts off with a speech by the BoC president Poloz on Monday which also includes the release of the Bank of Canada’s business outlook survey. Canada’s trade balance numbers are also due which is expected to show a 0.9 billion increase following the deficit of 0.7 billion. Canadian housing starts are also expected to increase from 213k to 215k while Friday will see the release of Canada’s unemployment data, where the unemployment rate currently stands at 7.30%.
USD: The week ahead from the US will see the release of the ISM non-manufacturing PMI, which is expected to rise from 53.4 in February to 54.1 in March. However, the focus for the week will be the FOMC meeting minutes from the March policy meeting followed by Janet Yellen’s speech on Thursday. In light of the recent developments in the labor markets, Ms. Yellen’s comments will once again come under focus by investors.