With no major updates on hand, the USD stretched its last weekly losses to Monday when the Federal Reserve Governor, Lael Brainard, said that “the U.S. economy isn’t immune to global risks and called for careful adjustments to the policy rate to preserve the expansion”, indicating further downside for the greenback. Additionally, the Euro remained firm with recent perceived safety value and ahead of the crucial ECB meeting on Thursday when the central bank is largely expected to announce further monetary policy measures to help the troubling economy. Moreover, improvement in commodity prices helped the AUD, CAD and NZD to extend their recent march while the JPY remained on the strong foot after the BoJ Governor said the central bank’s isn’t planning further rate-cuts. The Crude prices carried its gains forward as market players beamed up for probable bottom of the energy material after the Russian authority said talks to freeze Crude output with OPEC can take place on March and April months.
The market remained volatile during the early hours of Tuesday with some of the last week’s gainers, including AUD, CAD, Crude and GBP, witnessing profit-booking while the JPY maintained its strength as dismal Chinese Trade details, with exports tumbling the most in over six years, together with the a slower than drop in GDP output helped the Japanese currency. Furthermore, the Australian NAB Business Confidence matched upwardly revised number and the Japanese consumer sentiment index tested the lowest levels in more than a year.
Looking forward, today’s revised GDP print from the EU and Canadian housing market details, coupled with the Australian Westpac Consumer Sentiment Index, might offer further volatile market sessions; however, market players await Wednesday’s BoC and NZD and the much important Thursday’s ECB meeting in order to determine further moves. Hence, its beneficial for participants to remain cautious and support the JPY, together with the Gold prices, while staying away from the USD unless there are strong indications from the US.
IMHO, the EUR should liquidate its recent gains and might re-test 1.0800 grounds against USD should the ECB adheres to market feelings; however, the same could give counter strength to the greenback while having little impact on other pairs except GBP and CHF.
Recently published pessimistic data-points from China reignited concerns that troubles at the world’s second’ second largest economy and largest industrial producer might hurt the global economy, providing additional strength to the JPY. Moreover, the EUR remained weaker ahead of its crucial ECB meet, up for Thursday, while the greenback witnessed first positive day of the week due to perceived safety buying. The commodity currencies were on the weaker front due to the Chinese trauma while Crude also registered negative closing on Tuesday. Furthermore, the CAD remained weaker ahead of the BoC meet while the NZD stretched its recent losses together with the AUD that dropped further from a month’s high marked on Monday.
With the Chinese problems again heading up from the carpet, market players eagerly await the central bank decisions scheduled during the week, including ECB, BoC and RBNZ. While ECB is more likely to announce further rate cut and a possible hike in QE, BoC and RBNZ are expected to stand pat with their current monetary policy.
Should the BoC utters some dovish words while RBNZ surprises market with interest rate cut, which it avoided in its previous meeting and open door for further rate cuts in future, currencies of Canada and New-Zealand may reverse their recent gains. Additionally, UK Manufacturing Production and Crude oil inventories are something that could provide intermediate moves to the world’s largest market. Hence, it would be in the best interest of the market to keep supporting the JPY and have a positive bias towards the greenback.
As expected the market stretched its favor for the USD ahead of the crucial ECB meeting, scheduled for later today and started snatching back the EUR. Moving on, a four month high of the UK Manufacturing Production helped GBP to hold some grounds while JPY maintained its up-move amidst the global market uncertainty. Moreover, the Reserve Bank of New-Zealand (RBNZ) surprised markets by a quarter point cut into their official cash rate while dovish statement from the RBNZ Governor provided additional weakness to the NZD; though AUD and CAD remained firm due to commodity price advance and a no action during Bank of Canda’s monetary policy meeting. The Crude oil bounced back from its Tuesday’s fall after a large U.S. gasoline inventory drawdown amid improving demand ignored record high crude stockpiles.
During early Thursday, Chinese inflation numbers gave a smile on traders’ face as CPI beat forecasts by accelerating at its fastest pace since July 2014 and the PPI slowed its slide for the second straight month. Additionally, German Trade Balance figures registered least trade surplus in more than a year, providing additional downside to the EUR which is eagerly waiting for the ECB.
Even as the US Jobless Claims and a speech by the BoC Governor are scheduled during the rest of the day, market attention is likely to be on the ECB outcome where in the central bank is mostly expected for a 10-basis points deposit rate cut and an extension of the quantitative easing program together with an increase of monthly bond purchases. However, disappointment by the ECB President with less easing, as he did in December, might propel the EUR against majority of its counterparts. Hence, it is in the best interest of the market players to wait for such announcement as it would directly affect the EUR and USD. Should the ECB obeys market expectations, chances of the USD to gain considerable strength can’t be denied.
Draghi did it again! The much awaited ECB meeting, even after crossing the boundaries mentioned by many in-terms of monetary easing, propelled the Euro-area currency as the ECb Governor, Mario Draghi, said no further rate-cuts are expected. The central bank, in addition to announcing a 10 bps cut into its deposit rate of -0.30% (now -0.40%), also announced extension of QE (to 80 billion EUR from 60 billion EUR earlier) by including the corporate bonds. Moreover, the bank went a step further and also cut down it main refinancing rate to 0.0% from 0.05% previously. Furthermore, it also cut down its GDP and Inflation forecasts for 2016 to 1.4% and 0.1% from 1.7% and 1.0% respectively. The EUR plunged just after the monetary policy announcement and spurred the USD; however, the Governor’s speech provided heavy strength to the currency to reverse all the previous losses and end with more than 1.0% gains. The USD witness counter results and went down against majority of its counterparts, except AUD and CAD, which were lower mainly due to Crude prices downside after the Iran refrained from attending the meeting between Russia and other major oil producer to freeze the output. The JPY remained strong with safe-haven buying.
After the market witnessed bold moves of the Mario Draghi, the PBOC (Chinese central bank) again surprised market by hiking the Yuan rate to the highest in four months, helping the commodity currencies reverse their prior declines. With the move indicating optimism from China, safe-haven demand of the JPY reduced during early market hours while the USD remained in a sluggish zone.
Having witnessed critical moves by major central bankers, Canadian job numbers and UK trade balance are some of the data-points that might entertain the market players; however, it is less likely to witness wild moves due to the end of the week after yesterday’s trading pattern. Hence, it would be in the best interest of the market players to support USD with few long trades while major positions should be avoided as the Federal Reserve is set for its monetary policy meeting during the next week.
With the ECB President expecting no further rate-cuts by the European Central Bank, the regional currency, Euro, defied the latest monetary policy easing moves by the central bank and registered heavy gains on a weekly basis. The ECB’s move, which cut down its Deposit rate and main refinancing rate, in addition to extending the QE amount and adding the corporate bonds into the market, failed to hold back the Euro Index (I.EURX) which rallied for the first time in three weeks. The US Dollar, on the contrast, needed to bear this burden without any important economic data-points and dropped against majority of its counterparts, except NZD which was dragged down by RBNZ’s rate-cut. The US Dollar Index (I.USDX) plunged for the second consecutive week. Moreover, the commodity currencies, mainly the AUD and CAD, stood tall thanks to recent gains in crude oil and overall improvement in global risk sentiment while the same moves restricted the JPY from registering higher gains. Furthermore, the GBP also extended its rise and improvement in Chinese Inflation numbers overshadowed weaker Chinese Industrial Production which grew at its weakest pace during January and February since 2008, together with the retail sales’ slowest rise since May 2015. The Crude oil maintained its surge with the International Energy Agency (IEA) saying on Friday that the energy product has bottomed out while further drop in US rigs for Crude and Gas to the lowest levels in more than 75 years provided additional strength to the Crude prices.
Following its heavily volatile week, global financial markets started current central-bank focused week on firm footing during early Monday as critical meetings of the BoJ, FOMC and BoE are scheduled to take place during the week. Even if there aren’t any updates scheduled on Monday, except a speech by RBNZ Governor, tomorrow’s monetary policy meeting by the BoJ and US PPI, Retail Sales and Empire State Manufacturing Index, are likely to provide fuel to the forex market.
Even if none of the central bankers, including FOMC, BoJ and BoE, are expected to alter their current monetary policies, with the recent ECB moves, chances of any surprise announcement relating to future moves can’t be denied. Moreover, economic forecasts and a speech from the Fed’s Chair, Janet Yellen, may create headlines during the week. Hence, it would be prudent to take note of these critical details before taking any trades as markets may respond with a thrust to these outcomes.
On Monday, the US Dollar recovered some of its last weekly losses and started the week in positive territory, which was carried on Tuesday, as market players expect the Fed to utter some hawkish words in the light of recent ECB action which said no further rate-cuts are coming. Further, the EUR witnessed some more profit booking without any major economics while the JPY maintained its strength as global markets again falls on macro uncertainty and safe-haven demand rises. The commodity currencies, namely AUD, NZD and CAD, also dipped as the commodity basket remained weaker with Crude taking the toll after major producer, Iran, refrained from joining the international talks of production freeze between Russia and the rest of the major oil producer. Moreover, strength of the greenback also weakened the commodities further.
On Tuesday, the Bank of Japan held its monetary policy unchanged and helped the JPY stretch its upside while the commodity basked continued on south-run with the greenback strength and a global supply glut restricting their demand.
Market players will now aim for US PPI, Retail Sales and the Empire State Manufacturing details in order to determine further moves of the US Dollar. As forecasts concerning the PPI and Retail Sales indicate further downside of the US Dollar, chances are higher that the greenback extends its up-move if these numbers print upbeat marks. Hence, it would be in the best interest of the traders to wait for the actual headline numbers from US before taking any buying trade for the USD.
With surprisingly weaker Retail Sales and PPI details, the US Dollar weakened during later half of the Tuesday, ignoring unexpected hike in Empire State Manufacturing Index to 0.6 in March, the highest since July, from minus 16.6 the prior month. However, the greenback managed to strengthen against GBP, CHF, CAD, AUD and NZD as weaker commodity prices held back the commodity currencies and oscillating views on “Brexit” further dragged the GBP down. Moreover, the JPY remained sluggish with the risk-off market mode cutting down its safe-haven demand while a dip in API crude inventories helped the energy prices rise on early Tuesday.
While the market is awaiting Crucial FOMC decision, scheduled for later today, BoJ Governor, during early Wednesday said to Japanese parliament that the central bank can go to -0.5% rates theoretically and weakened the JPY. Moreover, the EIA and DoE Crude inventories, scheduled for the later today, may provide helpful signals to determine immediate moves of the Crude prices.
Even if there aren’t any chances favoring Fed-rate hike during today’s Fed meeting announcement, speech by the Fed Chair, coupled with quarterly forecast, the first after the central bank pumped up the interest rate for the first-time in December, are likely gaining major attention. Should the US Federal Reserve consider ECB’s recent action as something supporting the global growth, chances are higher that the central bank might indicate nearly three rate-hikes in 2016, up from one signaled in earlier forecast, which in-turn can fuel the greenback. Hence, it would be in the best interest of the market players to keep a close eyes on the Fed announcement prior to taking any USD related trades.
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With a weaker CPI and an unexpectedly dovish tone of the US Federal Reserve forced the US Dollar had to nurse losses on Wednesday. The US policy makers forecasted on two interest rate hikes during the 2016 against previously expected four; moreover, the Fed Chair also cited potential impact from weaker global growth and financial-market turmoil on the U.S. economy. Moreover, the Fed economic forecasts also revealed that their inflation forecast for 2016 could be 1.2% from 1.6% projected earlier while they further cut down the Unemployment rate forecasts for 2017 and 2018. As the Fed disappointed markets, the greenback plunged against majority of its counterparts while the same effect helped commodities extend their recent gains. The Crude prices maintained its up-move and rallied to the fresh 2016 highs as some of the OPEC members, except Iran, agreed for production freeze talks during April, the first accord to take place in 15 years, which in-turn helped the AUD, CAD and NZD rally considerably. Going forward, the JPY also rallied across the board as heightened uncertainty of the Fed’s rate-hike mission rejuvenated global safe-haven demand.
On Thursday, markets carried forward their Wednesday moves against the USD while an unexpected dip in the Australian Unemployment and a rise in New-Zealand GDP further propelled the AUD and the NZD respectively.
Moving on, Thursday becomes another day ruled by the central bankers, though of less importance than the Fed, including monetary policy announcement by the SNB and the BoE. Moreover, US Philly Fed Manufacturing Index and Jobless Claims, coupled with the Canadian Wholesale Sales, are some additional data-points that might continue fueling Forex market moves.
Even if neither the SNB nor the BoE is expected to alter their current monetary policy, a dovish outcome of the BoE statement, which is more likely can further magnify the GBP downtrend while a hawkish SNB words, considering recent improvements in economic details, can further propel the CHF. Also, the USD might recover some of its yesterday’s losses, though not to a high level, if the US details print a rosy picture of the world’s largest economy.
Following FOMC’s disappointment during late-Wednesday market players kept punishing the US Dollar on Thursday while upbeat tone of the BoJ Governor and a neutral outcomes of SNB and BoE monetary policy meetings, coupled with optimistic sentiments for Crude prices, helped the JPY and commodity currencies. Moreover, the Euro remained more or less on the positive side mainly due to USD decline and an improvement in Core CPI while GBP also remained firm with BoE giving no signals for further monetary easing. Additionally, the US Dollar ignored nearly nine month high of Philly Fed Manufacturing index, to 12.4 from -2.8, and a revised down Jobless figure as traders took Fed’s tone a bit more serious towards lesser interest-rate hikes this year.
During Friday, the market kept favoring the JPY, which strengthened, against USD, to the highest levels since October 2014 while lowest crude output since December and a smallest gaining Crude supplied, as indicated by the EIA, favored further advances of the Crude, which in-turn helped the AUD, NZD and CAD.
With all major events already took place, and damaged the USD, Canadian CPI and preliminary reading of US UoM Consumer Sentiment become left-outs to watch for the rest of the day. Should the Canadian inflation readings match consensus, chances of its magnified strength become higher.
USD bulls were badly hit during last week after the Federal Reserve indicated fewer rate hikes to take place during the year than the market expected; moreover, the Fed Chair also cited risk of global economic slowdown to hurt the US economy and provided additional fuel to the greenback’s downturn, resulting into the third consecutive weekly decline by the US Dollar Index (I.USDX). The Euro, on the contrary remained a bit firm even as ECB’s chief economist, Peter Praet, said on Friday that the rates have not reached their lower limit yet. Moreover, weaker USD and an overall optimism for riskier assets have propelled commodity and equity markets, which in-turn helped the AUD, NZD and CAD gain further strength. Additionally, the JPY held its strength unchanged; though, Japanese holiday on Monday, together with no major releases scheduled during the week damaged the JPY a bit during the start of the week.
Unlike last week, the present week has fewer economic releases/events scheduled to roil the financial markets; however, with the weekend news against EUR, GBP and Crude prices, the USD is more likely to regain its strength if the US GDP prints welcome numbers. The British Prime Minister David Cameron was forced into a hasty cabinet reshuffle on Saturday following the shock resignation of a senior minister while Baker Hughes Inc. data showed that the number of U.S. oil rigs climbed for the first time this year. Also, the Chinese PBOC lowered down the Yuan reference rate to the lowest levels since January and damaged the commodity currencies and crude prices during Monday.
As the market again favored USD during weekend, together with no major releases from the rest of the globe except US Existing home sales, a higher print of the US housing market might help the greenback recover some of its recent losses while market players would continue keeping an eye on Friday’s US GDP.
Even after witnessing three month low US Existing Home Sales, the I.USDX carried its Friday’s gains, mainly triggered by higher Inflation expectations index, to Monday as two Federal Reserve officials supported the case for a hike in interest rates sooner rather than later. The greenback managed to register a positive daily closing across the board as market players now think that Fed has overly weighted the pessimism in its recent meeting. The Euro remained weaker as Current account balance dipped to three month’s low while headline PMI, up for release today, indicate mixed signals. Further, the GBP also dropped down as fears for Brexit and a sudden cabinet change triggered uncertainty over the Britain’s future while JPY also weakened during a holiday session. Moreover, commodity currencies, namely AUD, NZD and CAD refrained from their recent upside as commodity prices seemed taking a breath with no major releases.
During early Tuesday, when the Japanese market reopened, the JPY extended its yesterday’s decline as Japan’s manufacturing activity, as indicated by the Markit/Nikkei Flash Japan Manufacturing PMI, contracted in March for the first time in almost a year. Also, the Australian Central Bank Governor, Glenn Stevens, cited saying that the bank has enough room to ease further, if needed. However, market players await headline PMI, Ifo Business Climate index and ZEW economic sentiment details from EU and Germany together with the UK CPI numbers to determine today’s moves.
As the EU and UK are presently struggling over the Brexit and today’s data also emphasis on Europe and Britain, chances of magnified volatility on EURGBP can’t be denied. A better inflation from UK, which is more likely can drag the pair to sub-0.7750 important support, comprising 50-day SMA and a three month old ascending trend-line. Hence, it would be prudent to wait for these details and then to trade; however, the USD is expected to stretch its recent gains if the EU numbers print unwelcomed figures.
Terrorism again shocked the EU with a deadly attack on Brussels that killed nearly 31 people and provided another reason to the Brexit supporters as th regional has been repeatedly attacked. The EUR and GBP dropped after the attack and the USD gained; however, equity markets responded with less vigor as such attacks have been repeated in recent times. The USD got another boost while its most dovish FOMC member, Chicago Fed President Charles Evans, favored nearby two interest-rate hikes a year and indicated further improvement in GDP and job details. Further, the CAD remained strong against some of its counterparts as as the Canadian PM, in his 2016-17 budget, signaled issuing more of the short-term debt to benefit from historically low interest rates while the AUD enjoyed hawkish words of RBA Governor and ignored weaker Crude prices. Moreover, the Crude prices dipped mainly due to expectations that the US Crude inventories might continue marking higher numbers and increase the global supply glut while the new of higher Crude exports from Iran also weighed down the bullish sentiment for energy products. Additionally, markets also ignore the weaker UK CPI and upbeat numbers from Europe due to the attacks.
While Islamic State took responsibility of EU attacks, the EUR and GBP are more likely to extend their recent downside as such attacks have been repeated off-late, which in-turn might strengthen the case for Britain leaving the EU region after June referendum. On the economic side, the US New Home Sales and the New-Zealand Trade Balance are the only readings scheduled for publish during the day, together with Crude inventories.
Given the US prints upbeat mark, chances of greenback’s recent up-move to get stretched can’t be denied while the JPY is more likely to reverse its recent downside as there are no economic downs that it has to show, except the inflation marks on Friday. Furthermore, higher Crude inventories might provide additional weakness to the AUD and CAD with the NZD can also follow if the Trade deficit becomes magnified.
With the help of upbeat FOMC members’ comments, backed by an upwardly revised US Q4 2015 GDP numbers, market players seemed more of the certain that the Fed could raise their benchmark interest-rate during April meeting and may also negate their recently dovish tone. The news helped greenback to register considerable gains across the board with a first in four week positive closing by the US Dollar Index (I.USDX). Commodity basket was hurt due to the strong dollar, resulting into the AUD, NZD and CAD weakness while the JPY was also on its downside against the USD after a rise in stock prices and an upbeat US release cut down its safe-haven demand. Moreover, the EUR remained more sluggish, even after witnessing positive EU details , as market players thought the Draghi might have to adhere to monetary easing in the current phase of global weakness while recent attacks increased chances of Brexit, favoring another setback for the region.
As the EU and UK are closed for Monday, US personal spending and pending home sales will acquire major market attention while updates from major oil producers, relating to the April meeting, might provide reason for the Crude prices movement.
Should there be a positive US detail, chances are higher that some of the FOMC members, scheduled to speak on Tuesday, including the Fed Chair, may hold their recent bullish view and can favor further upside of the greenback. However, it would be prudent to wait for the Friday’s Job details prior to taking any big trades for the USD.
Even if the US Pending Home Sales rallied to the highest levels since June 2014, the US Dollar failed to hold its seven day winning streak, the longest since January, on Monday, as the Fed’s preferred price measure printed weaker than expected 0.2% gain and the previous gains of +0.5% were also revised down to 0.1% gain. The Europe market, which was closed for four days, opened on Tuesday; though the Euro remained on the positive side on Monday due to USD weakness. Moreover, the AUD, NZD, CAD, the big commodity currencies, also shrugged-off their previous losses against USD while the JPY failed to gain against its US counterpart due to speculations that Japanese Prime Minister Shinzo Abe might delay an unpopular sales tax hike and call a snap election. The Crude prices also went down as market players thought that the upcoming oil production freeze talks between the major producers will fail to curb the prevailing supply glut.
When majority of the markets are open on Tuesday, the USD extended its previous day’s losses; however, market players await Fed Chair’s public speech, at the Economic Club of New York, and the monthly Consumer Confidence details in order to forecast further moves of the greenback. Further, the Japanese Unemployment inched up a bit higher to 3.3% from 3.2% expected and prior while the Retail Sales rose less than expected.
Considering yesterday’s weaker spending data from US, speech of the Fed Chair will be closely observed. If Yellen chooses to be a policy dove and continue repeating what she did in recent FOMC meet, signaling the threat of global economic risks on US, chances of further USD downside can’t be denied. Moreover, as the Crude stock piles are expected to register another high, chances of downside by the CAD, AUD and NZD can’t be denied. Hence, it would be better to support the USD for an intraday basis but should be avoided taking any big trades ahead of Friday’s data.
Even as the US CB Consumer Confidence surpassed consensus and upwardly revised prior, the US Dollar Index (I.USDX) dropped heavily on Tuesday as the Fed Chair, in her speech at Economic Club of New York, said caution in raising rates is ‘Especially Warranted’ considering the global slowdown risk, indicating slower path of rate hikes during 2016. The Dollar bulls were defied with same news as market players now expect least chances that the US Fed would announce another interest rate lift in April meeting, which in-turn forced the U.S. currency to fall across the board. The JPY, on the contrast remained positive while the Gold also enjoyed the greenback’s slide; however, the Crude prices failed to take benefit of the same as Kuwait and Saudi Arabia said they would resume production at the jointly operated 300,000-barrel-per-day Khafji field even as major oil producers are considering agreeing on an output freeze. Moreover, the AUD, NZD and CAD kept stretching their recent upside against USD while the GBP and EUR were also positive without any major news from their respective economies.
On Wednesday, markets maintained their previous week mood and kept hurting the USD ahead of the ADP numbers, an early signal for Friday’s crucial NFP detail; however, the JPY lost some of its charm after the nation’s factory output in February fell the most since 2011, the year when devastating earthquake damaged its economic balance. Furthermore, Gold is also witnessing profit-booking after it rallied heavily during previous day while the Crude prices remained under pressure as consensus concerning weekly release of EIA Crude inventory, scheduled for release on later today, indicates the stockpiles to reach 3.3 million barrel build, an increase to a record high for a seventh straight week.
Considering the recent risk on-off mode, mainly due to mixed communications from Fed policymakers, it becomes prudent for market players to await the Friday’s US job details; though taking an intraday sell call for the USDJPY, USDCAD and EURUSD can’t be denied.
Although US ADP, an early signal for Friday’s crucial NFP number, surpassed the 195K forecast with 200K mark, a downward revision in to the prior release to 205K against 214K, threatened the market players as the US labor market isn’t that robust and unearthed the expectations that the Fed would refrain from further rate-hikes. The news dragged the US Dollar down across the board, except GBP, for the third consecutive day on Wednesday. The Euro also got support for German Prelim CPI, which rallied to the highest in more than a year while AUD, NZD and CAD maintained their upstream without any major details as improvement in global equity markets pushed traders towards more risky asset classes. The Crude prices dipped lows as U.S. crude inventories rose to a record high while Gold prices dipped heavily with a failure to break $1245 pulling the safe-haven asset towards south.
During early Thursday, the markets turned in favor of the USD as the Chicago Manufacturing PMI, up for release during the later part of the day, is likely bouncing back to above 50 mark while data-points from Europe and GBP favor weaker prints. Further, the Australian New home sales dropped 5.3%, the sharpest decline since July 2014, while dovish comments relating to weaker Canadian GDP, from BoC Deputy Governor, Lynn Patterson, damaged the Canadian Dollar.
As the market again turned helping the greenback with the quarter-end day, chances of the extended up-move by the greenback can’t be denied; however, a drastic downside by the Chicago PMI and a hike in Jobless Claims, might force the USD further towards south. Furthermore, EU CPI is again expected to mark negative number while the UK Final GDP for Q4 2015 is likely remaining stagnant at 0.5% growth. Should there be downbeat prints from both these economies, which is more likely, the recent support for the greenback gets strengthened.
While better than forecast Chicago PMI helped the US Dollar to close the Thursday on a positive side against AUD, NZD, CAD, JPY and GBP, higher print of EU Flash Core CPI, continued dragging down the greenback as compared to EUR. The greenback which closed the Q1 2016 on a negative side across the board mainly due to the speculations that the Fed might refrain from its forecasted path of four rate-hikes a year gained during the last day of the quarter. The Euro remained firm with higher core inflation favoring no further rate-cuts, as promised by the ECB President during early month; though, the wider current account deficit and ‘Brexit’ fears kept fetching the GBP prices towards south. The Crude prices were largely drawn down with a stronger USD and a global supply glut concerns; though, news that the US oil production dipped for fifth consecutive month, as said by the EIA, helped limiting its further decline. Moreover, the JPY remained weaker due to broader risk-off market sentiment while weaker commodity prices dragged the commodity currencies towards south.
During early Friday, Manufacturing indices from Japan and China revealed contrasting results. Chinese official Manufacturing PMI surpassed the 50 differentiating mark for the first time in eight months while the Caixin Manufacturing PMI rallied to 14 months high; though remained below 50 mark. Then news helped the AUD recover some of its yesterday’s losses while the CAD and NZD kept on maintaining their downturn. Moreover, there was an incident registering earthquake in Japan but no life-loss were noticed and the markets also didn’t respond to it. Furthermore, the quarterly releases of Tankan Manufacturing and Non-Manufacturing indices from Japan remained dismal and signaled further downside and/or the need of additional monetary stimulus by the Bank of Japan.
As the US Dollar completed its first quarter with noticeable losses, market players eagerly await the always pivotal US job details in order to foresee chances of upcoming rate-hikes by the US Federal Reserve. Hence, it would be prudent to wait for these crucial releases to roll-on and then take the first trade of Q2 2016 for the USD. Considering the forecast, the NFP is expected to continue holding its +200K status and the Unemployment is also likely to remain stagnant at eight years low of 4.9%; however, Average Earnings are likely to reverse their prior -0.1% decline with +0.2% mark and an actual release matching/surpassing the forecast could become a strong positive for the USD to start the Q2, Stay Alert.
While weaker spending and dovish comments from the Federal Reserve Chair, Janet Yellen, kept the U.S. dollar in check during early previous week, surprise hike in Unemployment rate indicated that the Federal Reserve will remain cautious on interest rate hikes this year, which in-turn dragged the US Dollar Index (I.USDX) toward fourth negative weekly closing previous five, together with a considerable quarterly downside. The Euro remained firm with unchanged Flash CPI and a hike in German inflation mark while the GBP remained under pressure, even after witnessing an increase in GDP, due to growing concerns for Brexit and downbeat Manufacturing PMI. Moreover, weaker USD and a bounce in commodity prices, except Crude, caused market players to turn onto riskier assets and helped the AUD, CAD and NZD register noticeable gains against its US counterpart while the JPY maintained its strength even if the quarterly releases of Tankan Manufacturing and Non-Manufacturing Index spread favored further need of monetary easing from the Bank of Japan. Furthermore, the Crude prices kept weakening as the Saudi Arabia also joined Iran while declining to support the global oil production freeze.
Moving on to the present day, which started with the second time in three months’ stagnated Australian Retail Sales, market players are likely to concentrate more on the UK Construction PMI and the US Factory Orders while speech of BoC Governor might helped forecasting immediate moves of the CAD.
As the previous quarter gave large losses to the US Dollar and the Fed is also on its backseat while discussing the interest-rate hike, concerning the global economic pessimism, the current quarter is also likely to continue punishing the greenback unless the US Fed confirms that they are ready to hike the benchmark interest-rate again. Hence, it would be better for the market players to not support the USD buy; though, this week’s FOMC minutes should be closely examined for taking interim calls.