Weekly Market Review - March 25-29

The US dollar has demonstrated an impressive bullish rally this week, thanks to the good situation in the labor market and amid weaker euro and GBP, which are impacted by uncertainties over Brexit. EUR/USD fell 0.71% while GBP/USD declined by 0.86% since Monday morning. The US currency also performed well against the Swiss franc and the Japanese yen. Here are the most important economic events that have driven the prices:

Macroeconomic News

The UK to Hold Another Vote on Friday

In the UK, Friday, March 2019, is the chosen day when the country had to officially leave the European Union. However, the Parliament still hasn’t decided how it should be done. Yesterday, Andrea Leadsom, leader of the House of Commons, unveiled that the government would allow Members of the Parliament (MPs) to hold another vote today. It touches upon two elements of PM Theresa May’s deal: the withdrawal agreement and the political declaration, which sets the UK’s relationships with the EU.

Growth of UK GDP Slows

The UK’s gross domestic product (GDP) increased by 1.4% year-on-year (y/y) in the last three months of 2018. The figure was revised upward from the previous estimate at 1.3%, which had been the slowest growth since Q2 of 2012. The GDP grew only 0.2% on a quarterly basis, in line with analysts’ expectations. The crisis of Brexit talks puts pressure on confidence in domestic economic growth.

German Unemployment Hit Record Low

The unemployment rate in Germany fell to a new record low this month while retail sales rose in February in monthly terms. Analysts expect private consumption to push economic growth during the year. Interestingly, internal demand is regarded as the primary driver of the growth in a country that has relied on exports. The unemployment rate fell to 4.9% from 5.0%, the lowest since 1990. Retail sales added 0.9% on the month in February.

Growth in UK House Prices Stagnates

The house prices in the UK demonstrated a slight increase in March as the Brexit negotiations are putting additional pressure on the housing market. Thus, prices rose 0.7% year-on-year this month compared to a growth of 0.4% in February. The prices rose 0.2% on the month in March after a monthly decline by 0.1% in February. Analysts expected a y/y growth by 0.6% and zero growth in monthly terms. During the Brexit referendum in 2016, house prices were increasing by 5% a year.

US Jobless Claims Unexpectedly Decline

In the US, the number of people who applied for unemployment benefits decreased by 5,000 last week to 211,000 (seasonally adjusted), according to the US Department of Labor. Economists forecast the indicator to grow by 4,000 to 220,000 from 216,000 in the previous week, which was revised downward. The four-week moving average, a more accurate indicator, was 217,250, down 3,250 from the previous week. Continuing jobless claims increased to 1.756 million from 1.743 million.

US GDP Revised Down

The growth of the US GDP slowed more than anticipated in the Q4 of 2018, which maintains the 2018 growth below Trump administration’s annual target at 3%. Elsewhere, corporate profits fell for the first time in over two years. The Commerce Department revealed yesterday that GDP growth in the Q4 was 2.2% in annual terms, while economists expected a growth figure at 2.4%. The Q4 economic growth indicator is also down from the 2.6% pace forecast in February.

Upcoming News to Watch

Next week, you should keep an eye on several important reports and economic indicators that will be published in the US, Europe, and Asia.

The UK will release its manufacturing PMI on Monday. Also, the UK will publish the construction PMI and services PMI on Tuesday and Wednesday respectively. Besides, any event related to Brexit will have a significant impact on the British pound.

In the US, ISM manufacturing PMI will be released on Monday. On Friday, the nonfarm payrolls report and unemployment rate indicator will be published.

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