• Audere Research

Weekly FX Outlook April 12th



Read via Portal


GB Pound

Sterling was sold-off.


Movements

GBPUSD opened at 1.3857 and moved gradually lower, trading below 1.3700 for the first time in two weeks (weekly low at 1.3667) to close with a loss of 1% at 1.3719.


GBPEUR opened at 1.1733 and depreciated steadily during the week, briefly breaking the 1.15 level (3-weeek low) to close with a heavy loss of 1.6% at 1.1545.



Movement rationale

The Pound was the worst performing major currency last week, recording a sharp market correction as other major economies are starting to close the vaccine roll-out gap. Investors started to take profit on recent gains and sell GBP on concerns relating to AstraZeneca jab, which the U.K. is heavily dependent on, and headlines over a significant reduction in supply of doses during April. Also, the market was disappointed by the UK PM Johnson speech, which crushed hopes for an earlier move on foreign travel. News that the UK began giving out Moderna’s jabs last Wednesday did little to ease the sell-off, with Sterling registering heavy losses against rival currencies.


Week ahead

The UK economic calendar includes the following, with UK GDP figures will be the leading indicator this week:


Calendar

Tuesday 7am | Gross Domestic Product (Feb), Industrial Production (Feb)


US Dollar


The US Dollar recorded its worse week since beginning of the year.


Movements

EURUSD began the week at 1.1809 and moved up during the first half of the week, reaching a high of 1.1927. It then consolidated around the 1.19 area to close at 1.1883 (+0.63%).


GBPUSD opened at 1.3857 and moved gradually lower, trading below 1.3700 for the first time in two weeks (weekly low at 1.3667) to close with a loss of 1% at 1.3719.


Movement rationale

A drop in US. long-term interest rate triggered the worst week for the Dollar in 2021. The currency remains highly sensitive to movement in US yield and investor risk sentiment. After recording its best quarterly run since 2018 (+3.6% in the first quarter against six other major currencies) USD now seems to have lost some momentum. While the US. vaccination programme is still going strong, dovish messages from the Federal Reserve, reiterated his commitment to support the economy and stay ultra-accommodative, and downbeat US jobs figures (first-time weekly claims for unemployment insurance rose more than expected) have prompted investors to unwind some bets on the Greenback. Some support for the Dollar came from the Producer Price Index (PPI), which measures wholesale price inflation and was released on Friday, surging 1% in March after increasing 0.5% in February.



Week ahead

The US economic data calendar includes the following, with investors waiting for US March inflation data due on Tuesday:


Calendar

Tuesday 1:30pm | Consumer Price Index Core (Mar)

Thursday 2:30pm | Initial Jobless Claims (Apr 9), Retail Sales (Mar)

Friday 3pm | Michigan Consumer Sentiment Index (Apr)


Euro


The Euro rebounded.


Movements

EURUSD began the week at 1.1809 and moved up during the first half of the week, reaching a high of 1.1927. It then consolidated around the 1.19 area to close at 1.1883 (+0.63%).


GBPEUR opened at 1.1733 and depreciated steadily during the week, briefly breaking the 1.15 level (3-weeek low) to close with its largest weekly decline since September (-1.6%) at 1.1545.


Movement rationale

After being heavily penalised by investors due to the slow vaccination programmes, the Euro found some relief last week and rebounded sharply against other major currencies, as the EU is now finally increasing its vaccination rates. As a result, there are expectations that the bloc will hit immunization targets earlier than expected, therefore accelerating the reopening of the Eurozone economies. Optimism about the Block’s area was also supported by the IMF report, which on Tuesday revised this year’s Eurozone growth forecast up to 4.4% from 4.2%. Some of last week EUR’s strength could also be attributed to a member of the European Central Bank saying emergency measures introduced to deal with the pandemic could be removed starting in September, thanks to expectations for a stronger economic outlook.


Week ahead

The Eurozone economic data calendar includes the following:


Calendar

Monday 10am | Retail Sales (Feb)

Tuesday 10am | ZEW Survey – Economic Sentiment (Apr)

Wednesday 10am | Industrial Production (Feb)

Friday 10am | Consumer Price Index (Mar)


Call +44 (0) 203 884 992 to discuss further with an advisor.

Recent Posts

See All

Weekly FX Outlook July 19th

Read via Portal GB Pound Sterling was under pressure. Movements GBPUSD opened at 1.3874 and after trading range-bound during the first part of the week, it started to depreciate to close near a 3-mont

Weekly FX Outlook July 12th

Read via Portal GB Pound Sterling had a volatile week. Movements GBPUSD opened at 1.3842 and traded in a wide range (1.3740-1.3900), ending the week largely unchanged (+0.23%) at 1.3874. GBPEUR opened

Commodities Monthly Roundup ~ July 6th

June saw the market taken by surprise by the Federal Reserve taking a bigger step toward the moment it will start withdrawing its monetary stimulus due to growing inflation concerns. This knocked the