FX Fundamental Breakdown – 22 Mar 2021
Failing to make a strong move in either direction, the dollar traded within a range in the last week. As expected, the Fed continued to hold rates at 0.25% last week. During their statement, they were surprisingly dovish. Stating that actual, current data was their main focus and not optimistic forecasts, which sparked some USD weakness. Economic data from the US last week wasn’t too great. Retail Sales (MoM) came in at -3% actual growth vs the -0.5% forecasted growth.
In the next week, events to watch out for include Fed Powell’s daily speeches from Monday (22/03) to Thursday (25/03) and the annualized GDP data on Thursday (25/03).
One week forecast for the USD is bearish.
It was pretty quiet for the EUR last week as it continued to move sideways, which it has been for the past few weeks. The economy continues to be severely affected by the Covid-19 pandemic, and most economic data from the EU has been negative over the past month.
Economic events to watch out for in the next week include the EU Council Meetings on Thursday (25/03) and Friday (26/03), and the Markit PMI Composite on Wednesday (24/03). The EUR will most likely be trading sideways into the next week as well.
One week forecast for the EUR is bullish.
The AUD continued to move sideways in the last week as economic data reported was quite mixed, creating a choppy AUD market. The Australian Employment Data reported early in the week was positive, with the actual value coming in at 88.7K vs the forecasted value of 30K, and the Unemployment rate dropped to 5.8% vs the forecasted 6.3%. There is a chance the RBA may reevaluate their policies earlier than expected if unemployment rates continue to improve as the ‘JobKeeper’ stimulus ceases, which is quite bullish for the AUD. Mixed data for the AUD included the Retail Sales data (MoM) which had negative results, coming in at -1.1% vs the expected forecast of 0.4% growth.
There are no major events to watch out for in the coming week for the AUD.
One week forecast for the AUD is bullish.
As expected, the BoE continued to hold rates at 0.1%, which saw the GBP moving sideways. The GBP is being supported by the BoE as they continue to ignore the idea of holding negative rates. During the last few weeks, the pound has been one of the strongest major currencies as it continually made significant gains across the board. A bullish factor for the GBP was the BoE’s purchase asset facility target remaining the same at 895B.
In the coming week, some high impact events to watch include the UK Employment Data and BoE Governor Bailey’s speech on Tuesday (23/03), the CPI and PMI Data on Wednesday (24/03), Governor Bailey’s speech on Thursday (25/03) and the GDP Data on Friday (26/03).
One week forecast for the GBP is bullish.