Welcome to the Weekly Market Analysis

marketsoutlook
Sterling rose against weaker US dollar
Sterling rose against the weaker US dollar and was steady versus the stronger euro last week as data showed the UK’s trade deficit narrowed more than predicted in January. The pound added more 1% against the Greenback to reach its best level in three weeks. Against, the euro, sterling briefly plunged after the European Central Bank’s meeting before paring losses to end the week almost flat. The pound was also barely changed versus the Australian dollar, but remains at its lowest in almost a year.
Looking ahead, the key event is the annual Budget statement from the chancellor on Wednesday, 14 March, with investors eyeing fresh tax and spending cuts. Hot off the heels of this is the monthly monetary policy decision from the Bank of England on Thursday.
USD slid to one month lows against its major peers
The US dollar slid to one-month lows against its major peers, as risk appetite improved following fresh central bank moves to boost growth. The dollar dipped by more than 1.4% against the euro and was down by over 1% versus the pound. The dollar-yen pair climbed 0.5% as risk appetite bolstered stocks and oil.
Another busy week for dollar trading with the Federal Reserve meeting to decide monetary policy on Wednesday. Investors have all but priced out a rate rise this month but will be watching for hawkish signs from chair Janet Yellen at the post-meeting press conference. Also in focus are the Philly Fed manufacturing report and the University of Michigan consumer sentiment survey.
Euro surges to best level in a month.
The euro was the big story last week. The currency initially plunged after the ECB threw the kitchen sink at monetary policy, cutting rates across the board and increasing its monthly asset purchases. Shortly after, however, the euro surged to its best level in a month as investors digested comments from president Mario Draghi, who suggested the bank may not have to cut rates further, fuelling concerns officials are running out of ammunition.
There is limited eurozone data out this week but the ECB meeting will continue to be in play as investors gauge whether the new measures will likely have an effect.
JPY – Analysts split over whether to launch fresh stimulus messages
After rising to its best level in 18 months, the yen has been trading in a narrow range versus the US dollar of late. This could shift this week with the Bank of Japan’s monetary policy meeting. Analysts are split over whether the central bank will launch fresh stimulus measures or hold steady.
Enjoy your week.
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