Weekly Review: High-Beta Strengthens Amid Positive Sentiment In Markets, While US Dollar Declines After Weak US Jobs Report
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USD

Last week, the US dollar continued to decline with the DXY index closing at 92.12 as investors saw that the Fed would not be in a hurry to raise interest rates.

In addition, the dollar was increasingly depressed on Friday after U.S. jobs reports were weaker than forecast.

In August, the US economy added 235K jobs, the lowest in 7 months and below the market forecast of a 750K increase.

For the coming week, we expect that the US dollar will continue to be sold following a recent jobs report that could cause the Fed to continue to delay for a reduction in its asset purchases at the next meeting.

In terms of economic data, the United States will publish its producer price index data on Friday. Producer prices for August are expected to decline due to falling price pressures in the ISM PMI.

EUR

Last week, the EUR traded higher, supported by a declining US dollar and a surge in inflation in the Eurozone.

The inflation rate in the Eurozone rose to 3.0% in August.

In addition, German Bundesbank President Jens Weidmann supported the ECB’s tapering talks in the wake of recent better economic data.

For the coming week, the main focus of investors is on the ECB’s interest rate decision, which will be announced on Thursday.

The ECB is expected to maintain its interest rates at this meeting, but, investors will monitor the debate on PEPP’s asset purchase program.

Several ECB members have expressed hawkish attitudes including Robert Holzman of Austria and Bundesbank President Jens Weidman asking the ECB to reduce its emergency bond purchases.

In terms of economic data, both Sentix and ZEW investor confidence is seen to decline due to the rapid spread of the Delta variant COVID-19 in the region.

GBP

Last week, the GBP traded mixed, higher against safe-haven currencies, but weaker against other high-beta currencies.

This is because the positive market environment has weighed on the safe-haven currency, giving the GBP some strength.

Still, the post-Brexit sentiment still haunts the GBP after former Democratic Union Party (DUP) leader Arlene Foster raised concerns of irreparable damage due to the stalemate over the Northern Ireland (NI) protocol.

For the coming week, investors will be looking at some economic data in the UK on Friday. The resurgence of COVID-19 in the country could affect economic activity.

NZD

Last week, the NZD was one of the strongest currencies, driven by positive sentiment in the market.

In addition, ANZ bank expects that the RBNZ will raise its interest rates by 25 basis points at its October meeting.

For the coming week, as there are no fundamental economic data in New Zealand, we expect that the strength of the NZD will be driven by sentiment in the market.

Positive market sentiment in increasing the strength of the NZD, on the other hand, if the sentiment turns negative, we can see a decline in the NZD.

CAD

Last week, the CAD surged amid rising crude oil prices, in addition to a risk-on market environment.

Last Wednesday, OPEC+ members agreed to increase crude oil production by 400K barrels a day until the end of December.

For the coming week, investors will focus on the results of the Bank of Canada (BOC) meeting on Wednesday.

The BOC is expected to keep its interest rates unchanged at this meeting.

AUD

Last week, the AUD benefited from strong economic data, in addition to positive sentiment in the market.

In the second quarter, the economy in Australia grew by 0.7%, after jumped by 1.9% in the previous period, and compared to market forecasts for an increase of 0.5%.

Moreover, Australia’s trade surplus expanded to AUD 12.11 billion in July, from AUD 11.1 billion in the previous month, and above market forecasts of AUD 10.2 billion.

For the coming week, investors’ focus is on the Reserve Bank of Australia (RBA) meeting. In this meeting, the RBA is also projected to maintain its monetary policy.

However, the AUD is very sensitive to market sentiment. A positive market environment can support the strength of the AUD, while a gloomy market environment can affect the strength of the AUD.

JPY

Last week, due to its safe-haven nature, the JPY has depreciated due to positive sentiment in the market.

For the coming week, we expect that the strength of the JPY will continue to be driven by sentiment in the market.

If the market mood remains strong, then we will see a further decline in the JPY.

On the other hand, if sentiment turns negative, investors will turn to safe-haven currencies like the JPY.

CHF

Last week, the CHF was also pressured by the favorable market environment.

For the coming weeks, since the nature of the CHF is also the same as the JPY, we expect that the movement of the CHF will also be driven by sentiment in the market.