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The U.S. greenback acquired its shine again this week, leveling up off of recent U.S. inflation knowledge pointing inflation charges selecting up the tempo in February.
General, FX outcomes did present a slight risk-off lean, however the traditional correlations weren’t as robust with an absence of main catalysts and central financial institution converse, signaling particular person narratives like BOJ’s potential fee hike and oil power have been driving components as effectively.
USD Pairs
Overlay of USD vs. Main Currencies Chart by TradingView
The U.S. greenback loved a robust week general, ending on a constructive notice. This efficiency was primarily pushed by hotter-than-expected inflation reviews (CPI and PPI), which bolstered the view that inflation stays stubbornly excessive. These knowledge releases sparked a pointy rally in bond yields, additional fueling the greenback’s positive factors.
The greenback’s power signaled that markets are reassessing their expectations for Federal Reserve coverage. The chances of fee cuts for June fell to 50% according to the CME FedWatch Tool, pushing the greenback larger. Regardless of some softer financial knowledge on retail gross sales and manufacturing, the main target remained squarely on inflation and its potential to maintain the Fed hawkish for longer.
Bullish Headline Arguments
- U.S. Consumer Price Index for February: 0.4% m/m (0.3% m/m forecast; earlier); Month-to-month Core learn got here in at 0.4% m/m vs. 0.3% m/m forecast
- U.S. Producer Prices Index for February 2024: 0.6% m/m (0.3% m/m forecast/earlier)
- U.S. Retail Sales for February: 0.6% m/m (0.5% m/m forecast; -1.1% m/m earlier): Core Retail Gross sales at 0.3% m/m (0.4% m/m forecast; -0.8% m/m earlier)
Bearish Headline Arguments
EUR Pairs
Overlay of EUR vs. Main Currencies Chart by TradingView
This was a surprisingly resilient week for the euro, a bit like that underdog boxer who simply gained’t keep down. Regardless of a string of lackluster financial information and even some dovish remarks from European Central Financial institution members hinting at potential fee cuts (not precisely a fighter’s rally cry), the euro saved bobbing and weaving.
Beneath all of it, a few hotter-than-expected inflation reviews from Germany and France might need given the euro a much-needed adrenaline shot. Plus, with inflation fears working rampant throughout the worldwide markets, a contact of threat aversion might need despatched some traders looking for the euro as a barely safer different.
Bullish Headline Arguments
- ECB Kazimir says the European Central Financial institution shouldn’t lower rates of interest earlier than June
- Germany’s February CPI confirmed at 0.4% m/m as anticipated vs. 0.2% m/m earlier; 2.5% y/y as forecasted vs. 2.9% y/y
- French final CPI studying upgraded from initially reported 0.8% month-over-month improve in January to 0.9%
Bearish Headline Arguments
GBP Pairs
Overlay of GBP vs. Main Currencies Chart by TradingView
The British pound had per week filled with ups and downs, like a very bumpy experience on a double-decker bus. It began with a jolt decrease because of a worrisome jobs report that had merchants promoting the pound sooner than afternoon tea disappears. Fortunately, a internet constructive GDP replace helped the pound stabilize mid-week.
For the remainder of the week, the pound appears to have traded largely as a counter foreign money. And as threat aversion crept again into the markets, the pound possible felt the stress because it usually trades as a “risk-on” foreign money.
Bullish Headline Arguments
Bearish Headline Arguments
CHF Pairs
Overlay of CHF vs. Main Currencies Chart by TradingView
The Swiss franc began the week off robust, climbing steadily like a decided mountain goat. Even some disappointing client local weather knowledge couldn’t shake its confidence – the franc simply shrugged it off with the stoicism of a Swiss banker.
Nonetheless, issues took a activate Thursday. Regardless of surprisingly constructive producer value knowledge, sellers swooped in on the franc, making it stumble a bit. It was like watching somebody journey simply as they have been about to achieve the summit. But, by Friday, a contact of threat aversion crept into the markets, arguably giving the Swiss franc a lift. The safe-haven enchantment was again in opposition to many of the majors, and the franc completed the week with a good internet achieve, reminding everybody why it’s as dependable as a Swiss watch.
Bullish Headline Arguments
Bearish Headline Arguments
CAD Pairs
Overlay of CAD vs. Main Currencies Chart by TradingView
The Canadian greenback placed on its hockey helmet and had a stable week, skating circles round most of its main foreign money rivals. Boosted by internet constructive financial knowledge (very similar to an influence enhance from a plate of poutine), it looks as if the markets agree – that Financial institution of Canada is true to take a breather from all of the rate-cutting insanity.
Moreover, Canada’s favourite export, oil, had a successful streak of its personal. Information of rising oil demand and shrinking U.S. inventories have been like a dose of maple syrup for the Loonie, giving it an additional power enhance.
General, the Canadian greenback completed the week feeling robust and proud, second solely the U.S. greenback’s massive bounce this week.
Bullish Headline Arguments
AUD Pairs
Overlay of AUD vs. Main Currencies Chart by TradingView
The Australian greenback skilled a combined week, missing vital home catalysts to drive its course. Its motion largely mirrored broader market sentiment, indicating that it traded primarily as a counter foreign money.
In the direction of the tip of the week, the Aussie joined different risk-sensitive currencies in weakening in opposition to the U.S. greenback as a renewed concentrate on inflation knowledge triggered a shift in the direction of safe-haven property.
Bearish Headline Arguments
NZD Pairs
Overlay of NZD vs. Main Currencies Chart by TradingView
The New Zealand greenback had per week it might most likely prefer to overlook, taking a tumble like a kiwi chicken making an attempt out a brand new pair of curler skates. A mixture of world inflation jitters and a few less-than-stellar financial information from dwelling despatched the Kiwi on a downward slide.
Thursday’s double-whammy of sticky U.S. inflation numbers and a disappointing Enterprise Manufacturing PMI studying appeared to actually knock the wind out of its sails.
Bullish Headline Arguments
Bearish Headline Arguments
JPY Pairs
Overlay of JPY vs. Main Currencies Chart by TradingView
The Japanese yen began the week like a rising star, buoyed by expectations of wage hikes and their potential to assist the tip of the Financial institution of Japan’s damaging rate of interest coverage. Monday’s rally appeared to verify the optimism, presumably fueled by these late Friday reviews concerning the Financial institution of Japan contemplating coverage modifications.
Nonetheless, the tide turned shortly on Tuesday, correlating with feedback by BOJ Governor Ueda highlighting some financial weaknesses throughout the restoration possible despatched the yen tumbling. A short bounce arrived mid-week with some hotter-than-expected PPI knowledge from Japan, however it was short-lived.
Financial knowledge continued to come back in internet damaging, possible contributing to yen’s weak point, together with hypothesis that the BOJ wouldn’t ditch damaging charges till April.
Bullish Headline Arguments
Bearish Headline Arguments
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