Weekly Market Review - March 4-8
The week ending March 8 saw EUR/USD down 1.18%, suggesting a weakened euro. Japanese Yen was the biggest gainer among the majors, adding 0.67% against the USD and 1.85% against euro. The British pound continues its bearish mood amid the bustle around Brexit deal. During the week, GBP fell 1.42% against the USD and was up 0.26% in relation to euro.
ECB pushes more stimulus
The European Central bank unveiled its plan to take more measures to stimulate the euro zone's economy. The move is forced by global and European economic slowdown. The recent announcement comes about three months after the ECB started a bond-buying program of $2.9 trillion. Now the bank said that it would launch more targeted long-term refinancing operations (TLTROs) and maintain interest rates at the current levels during 2019.
US job growth slowed last month
The US nonfarm payrolls, an economic indicator with great impact on the US dollar, has increased by only 20,000 against an expected growth by 180,000. This growth has been the weakest since September 2017. The unemployment rate fell to 3.8%, which acted as positive news – this is probably why the US dollar wasn’t affected too much by the Labor Department’s report that came out on Friday.
UK Govt might lose Brexit vote
Sources from the UK government expect Theresa May to lose a Tuesday vote on Brexit withdrawal agreement. If the deal doesn’t pass the Parliament, it will vote on Wednesday on whether to ignore the “No Deal” or vote against it, in which case the Article 50 period will be extended, meaning that the UK’s exit from the EU will be delayed.
OECD lowest growth forecast
The Organization for Economic Cooperation and Development (OECD) anticipates the global economy to increase 3.3% this year and 3.4% in 2020 instead of 3.5% and 3.5% respectively as previously forecast. The main factors that burden the economic growth relate to political uncertainty and trade tensions between China and the US.
US trade deficit reaches record level
The US annual trade deficit in goods widened 10% last year, which is the biggest growth ever. Imports added 7.5% thanks to a fast pace in the US economic growth, with exports increasing by only 6.3%. On the other side, global economic growth has slowed, which is causing a decline in demand for products made in the US. Also, a stronger dollar is putting additional pressure on the trade balance.
Chinese exports decline
In February, China saw a sharp decrease in exports, down 20.7% year on year, compared to an expected decline by 4.8%. The drop comes after a January growth of 9.1%. February imports fell 5.2% against an expected drop by 1.4%. February export data demonstrate the largest decline in about three years, with imports tumbling for a third month in a row.
RBA keeps rates steady
On Tuesday, the Reserve Bank of Australia (RBA) decided to maintain the interest rates at the same level in an attempt to support the domestic economy and give it an opportunity to recover. Thus, the rate was left at 1.5%, in line with analysts’ expectations, as the policy makers anticipate a steady growth in the medium term.
Upcoming News to Watch
Next week, the US will release several indicators with potential impact on its national currency. Thus, on Monday, the market will see retail sales figures, with the Consumer Price Index (CPI) coming the following day. On Thursday, the US will publish its new home sales index and will end the week with industrial production.
The UK parliament will vote on the Brexit deal on Tuesday and potentially on Wednesday while the Bank of Japan will present its interest rate decision on Friday.
Jessica has written for us for 5 years and offers a unique perspective due to her having worked in the financial industry internationally. In fact, Jessica has worked in a staggering 8 countries including Germany, China and the USA. Learn more.