Greenback and Comdolls Strengthen
The NFP data released on Friday was crucial in aiding the greenback record gains last week. That report hasn’t had any effect on the currency so far today as EUR/USD and GBP/USD hits session highs of 1.2341 and 1.3875 respectively at the Asian session.
Friday’s NFP Report: 313,000 Jobs Recorded In February.
The U.S job growth rose in last month as it hit 1 ½ year high. The wage gains, however, slowed down, with signs pointing to an increase in inflation this year. NFP surged by 313,000 jobs last month. The average hourly earnings went up by 4 cents or 0.1% to reach $26.75 in February. This is a decrease compared to the 0.3% rise witnessed in February.
The plunge in average hourly earnings led to the decrease in the year-on-year increase in average hourly earnings to 2.6%, down from 2.8% recorded in January.
The unemployment rate was however unchanged, standing at the 17-year low of 4.1%. The average workweek bounced back to 34.5 hours after plunging to 34.4 hours the previous month.
Risk Appetite from a Strong U.S NFP Pushes Comdolls
AUD and NZD
The risk appetite that resulted from a strong U.S NFP was the major catalyst in the gains recorded by AUD and NZD.
The NZD/USD went up is 42 pips or +0.58% during the Asian session this morning to 0.7321; NZD/JPY also surged by 30 pips or +0.38% to trade at 78.04; and EUR/NZD fell by 65 pips or -0.38% to finish the session at 1.6829.
AUD/USD also went up by 20 pips or +0.26% to finish strongly at 0.7866; EUR/AUD meanwhile was down by 13 pips or -0.0.8% to trade at 1.5664; and GBP/AUD pair fell by 26 pips or -0.15% to 1.7620
The Yen started out poorly but bounced back to record some gains after Abe’s (and even Finance Minister Taro Aso’s) terms where being questioned.
The pair of USD/JPY attained a session high of 106.98 before plunging to 106.62; EUR/JPY also rose to 131.69 before falling to 131.39 by the end of the session, and GBP/JPY also surged to a session high of 148.21 before falling to 147.77.
Forex Outlook for the Week
The events slated for this week are;
- US inflation: Tuesday, 12:30.
The wages and inflation figures in January exceed expectations and led to increased chances of more rate hikes. Core CPI for the month of February is expected to remain stable at 1.8% y/y while increasing by 0.2% m/m.
- US PPI: Tuesday, 12:30.
The Headline PPI is expected to surge by 0.1% after recording an increase of 0.4% the last time. Core PPI meanwhile is expected to rise by 0.2% after also recording 0.4% rise in January.
- Mario Draghi talks Wednesday, 8:00.
The Euro plunged after the dovish remark made by ECB President Mario Draghi. He is presented with another chance on Wednesday to move the financial market when speaking in Frankfurt. He is set to speak at the Institute for Monetary and Financial Stability, and it is expected that monetary policy talks will top his agenda.
- US retail sales: Wednesday, 12:30.
The retail sales report for January received little attention due to inflation figure. It will, however, have a chance to shine by itself. Headline sales dropped by 0.3% in January, and it is expected to rise by 0.3% in February. Core sales are also expected to rise by 0.3% after staying stable the last time.
- New Zealand GDP: Wednesday, 21:45.
This is a very important event considering the fact that New Zealand published its Gross Domestic Product only once. Growth expectation for the fourth quarter is 0.8% after it recorded a 0.6% rise in the third quarter.
- US housing data: Friday, 12:30.
Building permits and housing starts might head in different directions this time around. Building permits are expected to drop from the previous 1.38 million annualized to 1.33 million. Housing starts are also expected to decrease from the previous 1.33 million to 1.30 million. The two both sliding will likely not trigger any market movement.
- US consumer confidence: Friday, 14:00.
The last major event of the week will be handled by the University of Michigan’s Consumer Sentiment. For the month of February, the final score was 99.7 points. The preliminary figures for the month of March now stand at 99.6 points.