The Forex Week In Review
This week Forex markets took a breather from recent volatility with a shortened week for most due to the Easter holidays and an absence of much key data in the wake of the monthly central bank meetings. The exception to this came on Tuesday as markets were rocked by news of terrorist attacks in Brussels which saw risk-sentiment briefly knocked off course as equities slipped lower and safe-havens were bid. This volatility was fleeting, except however for Sterling which continued to move lower over the week weighed upon expectations for increased Brexit support in the wake of fresh European terrorist attacks.
Crude Oil, which has been advancing steadily over recent weeks, turned lower this week weighed upon by yet further growth in US Crude Oil inventories which heightened the over-supply which has dominated the sell-off over the last two years.
- USD The US Dollar was bolstered this week by a raft of positive Fed commentary as members espoused Hawkish views. Notably Fed’s Bullard said that policy makers should consider hiking in April amid positive outlook on inflation and the job market. Recovery in economic indicators suggests that policy tightening would avoid “overshooting on inflation”. February Durable Goods fell less than expected, underpinning positive USD sentiment.
- EUR The single currency traded steadily lower over the week, weighed upon by USD strength and lack of catalyst for further upside. The ECB noted in its economic bulletin that weak external demand and a slowdown in emerging markets will dampen the recovery.
- GBP Sterling was knocked sharply lower over the week as fresh European terrorist attacks fuelled investor expectations of increased support for a Brexit vote in the UK’s June 23rd referendum. These moves were further extended by Hawkish Fed comments mid-week. On the data front, February Retail Sales were shown to have fallen less than expected.
- JPY JPY traded lower over the week, despite initial strength in the wake of European terrorist attacks. Latest BOJ meeting minutes showed that policy makers engaged in heated debates on the advantages and disadvantages of the negative interest rates, with one even suggesting it was preferable to roll it back.
- AUD The Australian Dollar moved lower over the week weighed upon by a stronger US Dollar and the slide in commodity prices, led by the moves in Oil.
- CAD The Canadian Dollar corrected lower over the week weighed upon by a decline in Oil prices which lost 4% as US crude stockpiles rose more than expected, strengthening concerns about a stubborn global glut.