The US Dollar and Euro remained stagnant last week following mixed data releases.

Weekly market report for the week ahead

Week starting 24-05-2021


USD

  • The past week saw the USD rangebound, remaining on the back foot after two weeks of decline.
  • There were no major data events last week, resulting in the USD treading water.
  • GDP numbers for the first quarter will be released this week. They will likely rise from 6.4 - 6.5%; this is largely expected, with inflation hitting new highs recently.

EUR

  • The EUR started strong last week. This, despite continued tapering fears and further attention on the spread of the Indian Coronavirus variant.
  • A slew of Eurozone data was released as well – largely mixed, leading to significant volatility in the EUR/GBP pair. This is evidenced by the fact that the EUR/GBP traded in a very loose band for most of the week (between 0.859 and 0.863).
  • On Tuesday, it was confirmed that the Eurozone was officially in recession (as expected) with the release of negative GDP data. This followed employment change data dropping lower than expected for the month (-0.3% vs. 0.4%). However, it became evident that the European economy is still making strides towards recovery as the market composite Purchasing Managers’ Index (PMI) showed significant activity, coming in higher than what was expected on Friday (56.9 vs. 52.6).
  • The European Central Bank (ECB) has again reiterated its commitment to maintaining the Pandemic Emergency Purchase Programme (PEPP) and stated that the need for tapering is still far off.

GBP

  • The sterling performed fairly well in the markets last week. GBP/USD moved upwards by 0.2%.
  • The unemployment rate in the United Kingdom fell by 0.1% in March, to 4.8%. The number of employed workers in the region increased by 84,000 during the first quarter of 2021. Furthermore, Claimant County Change declined in April, with 15,100 fewer people claiming unemployment benefits.
  • The UK Inflation rate is up to 1.5% (YoY), from 0.7% in March and 0.3% in February. Consumer Price Index (CPI) rose by 1.3% in April (YoY), while Core Producer Price Index (PPI) increased by 2.5%.

ZAR

  • The Rand has continued its strong rally off the back of the South African Reserve Bank (SARB) easing policy decisions and is keeping a straight course to meet upcoming growth forecasts.
  • Inflation forecasts for the coming year are lowered, but SARB warns that consumer prices could increase.
  • The global "risk on" sentiment is driving the Rand’s strength and could continue to do so as commodity prices continue to climb higher.

AUD

  • The Australian Dollar weakened about 0.7% against the greenback and about 1.05% against the Pound last week.
  • Australian retail sales figures for April were released on Friday and revealed a 1.1% increase from March.
  • The Australian construction work done for the first quarter is expected to be released on Wednesday and is expected to increase by 1% compared to the previous quarter.

NZD

  • The Kiwi Dollar weakened about 1.16% against the greenback last week.
  • New Zealand’s retail sales figures for the first quarter were released in the early hours of this morning and resulted in a 2.5% increase on quarter-on-quarter figures.
  • We can expect the balance of trade data for April to be released on Wednesday. It is forecast to decrease by NZD 100 million.
  • The Reserve Bank of New Zealand (RBNZ) is expected to make an interest rate decision on Wednesday, no change is expected. The interest rate decision will then be followed by a RBNZ press conference.

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