Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
US sharemarkets recover after horror week
US sharemarkets recovered on Friday after a horror week that saw US shares down as much as 5.0% at one point, but Friday’s rebound saw the benchmark US S&P 500 up 2.1% on Friday and end the week down only 1.4%.
In FX markets, the Australian and NZ dollars were both higher on Friday helped by improving global sentiment.
The AUD/USD gained 0.6% with the pair in a clear trading range between 0.6200 and 0.6400 in which the pair has been stuck since early February.
The NZD/USD climbed 0.8% with this pair also in an obvious trading range between 0.5600 and 0.5775.
In Asia, the greenback eased from recent short-term highs, with the USD/SGD and USD/CNH both down 0.2%.
Fed, BoJ and BoE all due in massive week
The upcoming week features several critical central bank decisions, including the Federal Reserve’s FOMC and the Bank of England.
Meanwhile, the Bank of Japan is expected to hold its target rate steady at 0.5% on Wednesday, with no major surprises anticipated.
Inflation remains a primary concern, with key CPI readings from the Eurozone (Wednesday), Japan (Friday), and Canada (Tuesday).
Australia’s labour market data for February, including unemployment (expected to remain steady at 4.0%) and employment change (consensus: +28k), will also be closely watched for signs of resilience.
Growth indicators also dominate the agenda, with New Zealand’s Q4 GDP report (consensus: +0.4% QoQ) likely to draw attention, especially after the previous contraction of -1.0%.
On Tuesday, Germany’s ZEW survey results are expected to shed light on business sentiment (previous expectations: 26), while US housing starts data will provide another perspective on the state of the real estate market.
China braces for tariff turbulence
This Monday at 1.00pm AEDT, the retail sales figures for China will be revealed.
With the help of the extended Lunar New Year break, the enlarged consumer trade-in program, and some wealth benefits from the recent stock market boom, we anticipate that retail sales growth will accelerate to 4.0% year over year in January and February from 3.7% in December.
We see potential risk of further increase in tariffs on China on 2 April. Based on our estimation, the existing 32% tariffs on China is not yet fully priced in.
USD/CNH currently sits at 50-week moving average support 7.2242, where USD buyers may look to take advantage.
Aussie, kiwi higher, but remain in respective ranges
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 17 – 22 March
All times AEDT
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.