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Currencies included: USD, EUR, GBP, ZAR, AUD and NZD

 

Data releases and relevant current affairs for the week

Currency movement forecasts, market analysis and expected data release results

Important events and predicted effects on currencies

 

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Market predictions and forex forecasts for the week of 25 October 2021.

weekly market watch 11 January 2021

Week starting 25-10-2021

 

USD

  • Over the past week, the USD weakened against 16 of the top 20 currencies. The USD weakened against all the top 10, with the most notable being -1.13% against the NZD. On the other hand, we saw the USD strengthen 4.34% against the TRY, which was a result of an unexpected and uncalled-for rate cut in Turkey.
     
  • Data wise, we have not seen much action from the US. The major US events were speeches from the various Fed members and an improved unemployment figure for October. Coming up, we have durable goods orders for September, which is expected to decline by 1% from a 1.8% decline for the previous period. The main event this week will come from the US GDP data on Thursday. This is expected to come in at 2.5% from a previous 6.7% level and so it has the power to hit the USD hard if it does not perform.
     

EUR

  • Volatility on the EUR picked up significantly this past week. We saw the common currency lose ground overall against the GBP, hitting an 18-month low on Monday. However, some significant swings were noted in both directions. In terms of other majors. The EUR traded mainly flat and ranged for most of the week against the USD and JPY.
  • This week, investors questioned just how temporary rising inflation is, considering the continued supply chain bottlenecks and rising energy costs. More telling is the European Central Bank’s (ECB) discussion on amending its budget rules to account for more emergency spending in the Euro block post pandemic. This does not bode well for the inflation outlook in the medium term as government spending has been known to keep inflation high in the medium to long term.
  • Jens Weideman, a known ECB hawk, announced his resignation last week. This increases the prospects for longer loose monetary policies as power dynamics at the ECB become more skewed towards the dovish policy makers.

GBP

  • Last week, The UK released its inflation rate figure for September. Inflation came in at 3.1% (YoY), slightly lower than expected, after the 3.2% reading in August. Month-on-month numbers were reported at 0.3%, following the 0.7% reported price increase in the month prior.
  • Retail sales data was released last week for the September period. Retail sales growth came in at 0.2%, underperforming the expectations of 0.5% growth and furthering the 0.9% contraction from August. GfK consumer confidence for October was also released and came in at -17. This reading came in lower than analyst forecasts of -14 after the prior reading of -13.
  • This week, national housing prices for October will be released and is expected to rise by 0.5% after the prior 0.1% uptick. Mortgage approvals, lending figures, and Bank of England consumer credit figures for September will be released as well.

ZAR

  • Last week, South Africa’s September inflation rate was released. Year-on-year inflation was reported at 5%, in line with expectations, up from 4.9% in August. Prices rose 0.2% in September, adding to the 0.4% increase in the month prior. Main upward pressures came from the prices of transport (10.1%), particularly fuels, as well as housing and utilities (4%).
  • This week, South Africa’s balance of trade for September will come due. South Africa’s trade surplus is expected to decline from R42.4 billion in August to R28 billion.
  • September producer price index (PPI) figures will also be released this week to complement te inflation data released last week. The PPI figures are expected to come in at 7.2% over the year and 0.8% over the month.

AUD

  • Last week was rather light on data coming out of Australia as Melbourne emerged from the longest COVID-19 lockdown recorded to date. Nevertheless, both flash services and manufacturing purchasing managers index (PMI) figures were released, providing further insight into the economic activity during October. The services PMI was recorded at 52, exceeding the expected increase to 48 after the previous 45.5 reading. Manufacturing PMI came in at 57.3, climbing from 56.8 in the month prior.
  • This week, Australia will release its inflation rate data for Q3 of 2021. Year-on-year inflation is expected to fall to 2.8%, after the 3.8% figure in Q2. Quarterly price pressure is forecasted to rise by 0.7%, adding to the 0.8% increase in Q2. Preliminary retail sales for September will also come due after the previous decline of 1.7%.

NZD

  • Last week, there was minimal data from New Zealand. Credit card spending in September declined by 12.9% (YoY), furthering a 6.9% fall in the month prior.
  • This week, New Zealand’s balance of trade for September will be reported. The country’s trade deficit is expected to narrow significantly after a reading of NZD 2.14 million in August.
  • Next week, New Zealand’s Q3 unemployment rate will be released. The unemployment rate is expected to edge lower to 3.9% from a previous reading of 4.0%.

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