Developments in the global markets last week saw the Dollar and Pound rise, while the Euro and Rand tumbled.

Weekly market report for the week ahead

Week starting 08-03-2021


USD

  • The US Dollar began its resuscitation as it climbed on the back of Biden’s $1.9 trillion stimulus package being passed through the senate, despite rising Covid-19 cases.
  • Non-farm payrolls beat expectations last week, buoying the Dollar further in Friday’s London session.
  • This week’s Consumer Price Index (CPI) data should play a significant role for USD pairs as economists are cautious about inflation potentially skyrocketing on the back of the pandemic.

EUR

  • The Euro continues to fall as the Eurozone lags in the vaccination race.
  • The biggest catalyst for the Euro this week is set to be the monetary policy statement from Christine Lagarde on Thursday. The European Central Bank (ECB) is expected to sit on their hands and make no material changes to the interest rate or bond purchasing.
  • Hints that the ECB is ready to act on some quantitative easing could prove to weaken the shared currency.
  • Germany will be releasing their balance of trade for January on Tuesday and Spain will be releasing their retail sales and CPI data on Friday.

GBP

  • The GBP has been on a tear since Rishi Sunak’s budget, as it provided hope to the UK economy leading the way to herd vaccination.
  • The Pound finished last week in the green. With a rather empty slate this week, the Pound could be vulnerable to some profit taking.
  • The balance of trade for January should narrow from -£6.2 billion to -£4.8 billion. At the same time, the month-on-month GDP for January will be released. It is expected to have declined by 5.4%. Manufacturing production and industrial production will also be released on Friday.

ZAR

  • The South African Rand tumbled on the back of the Dollar’s strength, as it blasted past the R21 to the Pound and R15 to the Dollar marks last week.
  • The emerging market is slowly seeing its economy reopen, but the damage seems to have already been done with the unemployment rate sitting above 35%.
  • The true impact will be revealed on Tuesday when the GDP growth rate for the fourth quarter will be released. It is expected to have climbed by 3.9%.
  • Thursday will see the current account, mining production, manufacturing production and quarter one business confidence.

AUD

  • Aussie Dollar pairs suffered last week as the Reserve Bank of Australia (RBA) increased their bond-buying operations to AUD 4 billion, while adding that the quantitative easing programme can be extended if necessary.
  • National Australia Bank (NAB) business confidence for February should climb from 10 to 11 when it is released on Tuesday.
  • Westpac consumer confidence is due out during Monday’s Asian session.
  • RBA Governor Philip Lowe will be giving a speech on Wednesday, traders should listen out for any hints as to how the economy is progressing.

NZD

  • The Kiwi Dollar has struggled alongside emerging markets and other comdolls.
  • This week, in the absence of any domestic data releases, the NZD will move in line with emerging markets as Covid-19 deaths start to dwindle and bond yields start to dominate the headlines.
  • Next week, the GDP for the fourth quarter is expected to fall by 0.5% quarter-on-quarter, but rise by 0.3% year-on-year despite Covid-19 restrictions.

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