It was a short week the one that ends today, with data condensed over the first days providing some nice intraday volatility for a change. But if something has begun clear, is that majors’ currencies continue to be trade on rate hikes’ hopes: strong data in the UK as usual has sent Pound to fresh multi years highs against its American rival where it stands, as improving data means tighter economic policies in term.
In Europe, the ECB did not much for the common currency, as Draghi press conference introduced the idea that the TLTRO could reach EUR 1T. Such amount of liquidity will increase the balance sheet heavily, which is overall negative for the currency, moreover considering the Central Bank is planning more easing while the rest of the world thinks on tightening.
In the US, employment figures shocked to the upside, with the economy adding 288K new jobs and unemployment rate down to 6.1%.But good numbers are not enough to change market’s view: nothing changed in the FED path of tapering and rates won’t be moved this year.
For the upcoming weeks, the calendar will be almost empty when it comes to news from the US and Europe, except for German inflation readings next Friday: will depend on where EUR stands at that time, but for the most, a weak number should put the pressure under pressure.
In the UK, the BOE will have its monthly meeting, again expected to be a non event, which will bring nothing new for the Pound. But over the week, other data may gave support to bullish Pound: on Tuesday,Industrial and Manufacturing data will be released, and if positive, further advances should be expected in GBP against its weaker rivals, such as USD and EUR. Local trade balance will be out along with BOE’s decision on Thursday, and may also affect the currency.
But the center stage this week may well be Aussie, as local and Chinese data will be out almost every single day of the week. Most relevant one for Australia will be the employment figures on Thursday that can make it or break it for the local currency, mostly after latest RBA Governor Stevens’ words on steady economic policy for a long time: good numbers may boost the currency in the short term, but it will take much more to revert the negative sentiment triggered this week.
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